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Pineapple Power [LSE:PNPL] is a London-listed cash shell which first arrived on the market in December 2020. In its prospectus, the company said it was seeking new acquisitions within the clean energy technology market.

For those unfamiliar with cash shells – otherwise known as SPACs (Special Purpose Acquisition Companies), these companies are typically listed with the intention of acquiring one or more currently private companies, usually in a specific sector. They represent a cost-effective way for private companies to achieve a public listing, without going through a costly IPO process.

The number of smaller SPACs available on the UK main market is now limited with new rules implemented in December 2021 imposing a much higher initial raise requirement for cash shells. Those SPACs which made it onto the market prior to these restrictions are highly valuable and sought after.

The PNPL wish list

Pineapple Power is managed by a team which has a strong track record in generating growth for shareholders. Potential targets, they argue, should be companies which have the potential to grow and which can generate substantial free cash flow over time.

Possible targets do not have to be in the UK per se, but must be in countries which have a strong focus on protecting investor interests, with low sovereign risk and which encourage and incentivise investment. They should also have the scope to grow with the injection of additional capital and demonstrate some form of competitive advantage or unique selling proposition.

Numerous opportunities for cash shells

The collapse in asset prices witnessed in global markets recently has provided cash shells with numerous opportunities. Typically, once a cash shell has identified a potential takeover candidate, it enters a reverse takeover (RTO) process, during which time shares in the cash shell are temporarily suspended. Once the acquisition is completed, the new company resumes trading on the exchange using the existing share structure, although new shares may also be issued at this time.

“All the bad news now seems to be in the market, and especially in the tech sector. We have seen a considerable re-pricing of technology assets in the US and indeed in other markets,” said Clive de Larrabeiti, corporate finance adviser at Pineapple Power.

As one of the few cash shells of this size still on the market, Pineapple Power is regularly approached by companies in the energy sector that are interested in a London listing. “The cash shell avenue is still an attractive one for companies in the clean energy market,” said de Larrabeiti.

Having listed in December 2020 Pineapple Power is one of the better known cash shells still available on the London market. It does not have any debt or legacy legal issues. While management is not allowed to discuss possible targets or indeed any discussions they might be having with companies, the overall message is an upbeat one.

“We are maintaining a highly visible and liquid market in the shares of Pineapple Power,” said de Larrabeiti. “We continue to be successful during tough periods in the market.”

Over-subscribed placing raises GBP 357k

Pineapple Power announced in mid-July that it had raised £357,000 via a London Stock Exchange placing. The new ordinary shares issued via the placing come to 19.97% of the cash shell’s issued share capital. Under current stock exchange rules this was the maximum amount the company could raise without the expensive formality of preparing a prospectus qualifying document.

The placing was over-subscribed and completed quickly. A director of the company and advisors subscribed for shares in the issue.

Companies in the clean energy space are running out of choices if they want to make use of a cash shell to get onto the London Market. Net Zero Infrastructure, another London cash shell, which was listed to target possible acquisitions in the clean energy infrastructure space, has already been suspended after it located a target in the shape of Taylor Construction Plant.

“With the rapidly decreasing supply of fully listed cash shells, we enjoy a very advantageous position and view the coming months with much excitement,” said de Larrabeiti.

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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