Acorns Grow Inc., the popular spare-change investing and checking account app, and Pioneer Merger Corp. are canceling their $2.2 billion blank-check deal for the app to go public.
The deal was canceled due to market conditions, and the startup now plans to raise funding and pursue a traditional initial public offering, according to Acorns Chief Executive Officer Noah Kerner.
“We really appreciate the partnership with Pioneer. They exceeded expectations and helped make Acorns public-company ready,” Kerner said in a statement. “Given market conditions, we will be pivoting to a private capital raise at a higher pre-money valuation as we continue on our path to 10 million paid subscribers saving and investing for a better future.”
Acorns and Pioneer join a growing list of companies to terminate SPAC mergers as the froth comes out of the once-booming market. Wynn Resorts Ltd.’s online betting unit, grill-maker BBQGuys and software provider ServiceMax have all nixed blank-check deals in recent months.
Acorns was founded in 2014 and charges users monthly fees to invest cash or spare change in a series of exchange-traded funds. It also offers checking accounts, retirement savings and debit cards.
The company is working on a new service for later this year called Customizable Portfolios that will allow users to invest a small portion of their money in individual stocks, Bloomberg News has reported. The expansion for Acorns into direct investing will help the app rival other mobile-first platforms like Robinhood Markets Inc. plus legacy services like ETrade and Fidelity.
At the time of its merger announcement, Acorns had 4 million subscribers. It’s grown since then.
“Acorns has exceeded its public forecast, crossed 4.6 million paid subscribers and helped everyday Americans save and invest over $12.5 billion to date,” Chief Financial Officer Rich Sullivan said in a statement.
Pioneer, a special purpose acquisition company, is led by Chairman Jonathan Christodoro and Co-Presidents Rick Gerson and Oscar Salazar. Christodoro sits on the boards of companies including PayPal Holdings Inc., while Salazar was a co-founder of Uber Technologies Inc.
In the original deal, Citigroup Inc. served as an adviser to Pioneer as well as the exclusive placement agent on a $450 million PIPE, or private investment in public equity. Moelis & Co. advised Acorns.
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