Virgin Group Acquisition Corp, a blank-cheque firm backed by billionaire Richard Branson, has jumped on the eco-friendly product craze and targeted Grove Collaborative in a merger to take the “sustainable consumer goods company” public in a $1.5bn deal.
In a transaction that is expected to close in the first or second quarter next year, the combined entity will have an approximate enterprise value of $1.5bn upon listing on New York’s Nasdaq market.
Grove, which has over 1.5m active customers on its direct online shop and makes eco-friendly cleaning, personal care and kid and pet products, said it would benefit from proceeds of up to $435m from going public through the deal.
This includes a private investment in public equity deal (PIPE) of $87m from an affiliate of the sponsor of Branson’s special acquisition company (Spac), as well as new and existing Grove investors, including General Atlantic, Lone Pine Capital, Sculptor Capital Management, and Paul Polman.
Grove’s CEO and co-founder Stuart Landesberg will head up the combined company, which has chosen the ticker “GROV”. The consumer products company said the deal would help accelerate its product innovation, as well as retail expansion.
“I am inspired by Grove’s vision to transform the availability and quality of planet-first products” said Richard Branson.
“Grove is paving the way for people to have more access to healthy, sustainable goods for their homes and I am excited to see the company’s impact on customers’ health and wellbeing.
“There are huge growth opportunities ahead, and we are delighted to work alongside Stu and his team as Grove continues to disrupt the industry and make a positive difference to people and the planet.
It comes at a time when investors are funnelling increasing amounts into startups that claim to directly solve sustainability issues with the products they make.
Just last month, sustainable trainers brand Allbirds enjoyed a warm welcome on its $4bn Nasdaq debut, as shares surged 93 per cent on its first day of trading.
But Allbirds’ shares have slumped 46 per cent in the month since its listing, dented by the fact that a few days post-IPO, the company was forced to abandon its claim to be the first “sustainable” IPO in the US, after the Securities and Exchange Commission objected.
It was an incident that shone a light on the recent trend for similar companies to play up their eco credentials ahead of an IPO, and all eyes will be on Grove if it takes on the accountability that comes with listing.
Grove, a firm that claims to be a “leader” in the “sustainable consumer products” sector, and pitches itself as innovating zero-plastic and zero waste home and personal care, is four years off reaching its goal of “becoming 100 per cent plastic free” by 2025.