By Sierra Jackson
Law360 (March 18, 2021, 4:15 PM EDT) — Real estate listing platform Offerpad said Thursday that it’s aiming to go public at a roughly $3 billion equity value through a merger with a special purpose acquisition company in a deal guided by Latham, Orrick, Simpson Thacher and Skadden.
Offerpad Inc. said in a news release that after its union with Supernova Partners Acquisition Co. Inc., the combined company will take the name Offerpad Solutions Inc. and its shares will be listed on the New York Stock Exchange under the ticker symbol OPAD.
Offerpad is working with Latham & Watkins LLP, and Orrick Herrington & Sutcliffe LLP is advising the company’s CEO and founder Brian Bair. Supernova is represented by Simpson Thacher & Bartlett LLP. Placement agents for a related private investment in public equity, or PIPE, deal are led by Skadden Arps Slate Meagher & Flom LLP.
Bair said in the statement that there’s an increasing demand for platforms that allow homeowners to buy and sell properties online
“At Offerpad, we combine the technology that makes it possible, with local real estate experts that provide fantastic customer service to sellers and buyers — all of which allows us to turn over homes more efficiently than anyone else in the category,” Bair said.
Founded in 2015, Offerpad buys properties directly from homeowners or helps them list their homes on the open market if they want to attract other buyers. The Arizona-based enterprise also offers services to help sellers improve their properties. Operating in more than 900 U.S. cities and towns, Offerpad expects to book $1.4 billion in revenue for 2021, according to the company statement.
In March 2019, the company announced that it had raised a total of $975 million in equity and debt capital. That amount includes the $260 million it said it landed from investment management firm LL Funds LLC in January 2017. Offerpad said in a May 2018 statement that it nabbed an additional $150 million.
Under the terms of the merger with Supernova, Offerpad’s existing investors can transfer all of their stakes into the combined company. The real estate platform said its stakeholders are expected to own about 75% of the company, and Bair will have a 35% voting stake.
The business combination will also create up to $650 million in cash proceeds, including $403 million that Supernova raised in its October initial public offering, $200 million from a PIPE deal and $50 million from a direct investment from Supernova affiliates, according to the press release. The PIPE investors include BlackRock, Zimmer Partners and developer Taylor Morrison Home Corp.
Blank check companies, or special purpose acquisition companies, raise funds through IPOs to take private companies public generally within 24 months of the offering. SPACs often target industries that reflect their management team’s experience.
The blank check company’s team includes Zillow’s co-founder and former CEO Spencer Rascoff.
Rascoff said in Thursday’s statement that as the real estate industry takes more transactions digital “online real estate as a whole is poised to grow rapidly in the coming years and that Offerpad is incredibly well positioned to grab a huge piece of this market.”
Offerpad and Supernova’s tie-up is set to close in the second or early third quarter of 2021 after receiving approval from Supernova’s shareholders and meeting other closing conditions. The companies said that both of their boards have already approved the deal.
Offerpad’s go-public deal follows after competitor Opendoor said in September that it had inked a merger agreement with a SPAC that valued the real estate platform at $4.8 billion, including debt.
Supernova CEO Robert Reid later told Law360 in an interview Thursday that Offerpad real competition was neither Opendoor or listing site Zillow.
“The real competition is the traditional way of selling your home, which is basically through traditional real estate brokers,” Reid said. “That less than 1% of homes being sold through [artificial intelligence] buying, we think that’s going to rapidly increase over time.”
Representatives for Offerpad did not immediately respond to requests for comment.
Offerpad’s financial adviser is J.P. Morgan Securities LLC. Supernova’s financial and capital markets adviser is Jefferies LLC, with J.P. Morgan Securities LLC also serving as capital markets adviser. Both companies’ financial advisers acted as placement agents for the PIPE deal.
The Latham corporate team advising Offerpad is led by mergers and acquisitions partners Justin Hamill and Josh Dubofsky and capital markets partners Marc Jaffe and Drew Capurro, with M&A associates Nima Movahedi, Madison Mapes, Josh Reisman and capital markets associates Benjamin Sosin and Jacob Walsh. Advice was also provided on tax matters by partner Lisa Watts, with associate Eric Kamerman; benefits and compensation matters by partner Michelle Carpenter, with associates Jordan David and Peter Bassine; public company representation matters by partner Jenna Cooper and counsel Andra Troy; real estate matters by partner Meghan Cocci, with associate Tiffany Taubman; intellectual property matters by partner Ghaith Mahmood and counsel Jia Jia Huang, with associate Nicole Nour; data privacy and security matters by partner Jennifer Archie, with associate James Smith; finance matters by partner Scott Ollivierre and antitrust matters by partner Mandy Reeves, and counsels Peter Todaro and Joseph Simei.
The Orrick team advising Offerpad CEO includes Matthew Gemello, Bill Hughes, Jason Flaherty, Steven Malvey and Peter Elias.
The Simpson Thacher team advising Supernova includes M&A partners Jonathan Corsico and Michael Wolfson, and associates Benjamin Bodurian and Matt Richardson; capital markets partners Roxane Reardon and Marisa Stavenas, and associate Arielle Trapp; executive compensation and employee benefits partner David Rubinsky and associate Laura Gallo; tax partner Jonathan Goldstein and associate Joseph Tootle; real estate partner Krista Miniutti and associate Stephanie Brenner and intellectual property partner Lori Lesser.
