Wheels Up set to go public via Spac merger

A private jet charter start-up backed by investors including Serena Williams and Lance Armstrong plans to go public via a merger with a “blank cheque” company launched by the former head of the Asian division of a private equity firm co-founded by LVMH.

The deal would give US-based Wheels Up, an online private jet booking platform, an enterprise value of $2.1bn. It is expected to close in the second quarter of 2021 and would mark the first private aviation platform to be listed on the New York Stock Exchange. 

The merger would generate up to $790m in cash, including up to $240m from Aspirational Consumer Lifestyle Corp, the special purpose acquisition company launched in September by Ravi Thakran, former head of L Catterton Asia. LVMH, the world’s largest luxury goods group, and L Catterton, the private equity business co-founded by LVMH, hold minority stakes in the vehicle.

Investors — including asset managers T Rowe Price, Fidelity and Franklin Advisors — will also provide $550m in private investments in public equity at $10 per share.

Proceeds will be used to clear part of Wheels Up’s debt as well as to finance technology investment, deals and expansion in markets with developed infrastructure including the Middle East, China and Japan, said Mr Thakran, founder of private equity fund Asia 3.0. 

“Initially, when you land in Asia, particularly where infrastructure and local connection will be needed, it is best to do a joint venture [to] gain experience before jumping [in],” he added. 

Kenny Dichter, Wheels Up founder and chief executive, hopes the merger will help turn the digital platform, which launched in 2013, into the “Uber of the sky”. 

The airline industry has been hit hard as countries have closed borders to contain the coronavirus pandemic. But Mr Dichter said 2020 had been Wheels Up’s best year for new memberships. “While business flying was down, personal flying was up,” he said.

The cost of Wheels Up’s individual membership for the first year, including a joining fee, is $17,500, while annual subscriptions start at $8,500 from the second year. 

Paul Yong, equity analyst at DBS, said the pandemic had spurred demand for private charter jets “as the wealthy look to travel more safely”, adding that the jump in demand may stick if “luxury travellers will permanently switch to flying private planes” in the wake of Covid-19.

Spacs, launched amid the Wall Street flurry of “blank cheque” company listings in 2020, have become a major driver of listing activity. Spacs typically have two years to find a company to take public using the proceeds they raise. Last week they struck mergers worth more than $15bn in a single day. 

The structure offers companies a quicker, cheaper route to going public than initial public offerings. But Spacs have been criticised for lacking transparency and providing greater returns for sponsors than for shareholders.

Mr Thakran will launch two more Spacs, one in a matter of days, with a similar focus to the first vehicle: European or US companies in consumer sectors including wellness, hospitality or spirits looking to expand in Asia.