425: Hunch Mobility to Go Public via SPAC Merger with Direct Selling Acquisition Corp.

Hunch Mobility, an urban air mobility platform in India, is set to merge with Direct Selling Acquisition Corp. (DSAQ) in a deal valuing the combined entity at $223 million.

Summary

• Hunch Mobility, formerly known as BLADE India, has entered into a definitive business combination agreement with Direct Selling Acquisition Corp. (DSAQ).
• The transaction implies a pro forma enterprise value of $223 million, with an implied pre-money market capitalization of $150 million.
• Upon closing, the combined company is expected to be named Hunch Technologies Limited and listed on the New York Stock Exchange under the ticker symbol HNCH.
• Hunch Mobility shareholders are expected to roll 100% of their equity, owning approximately 52% of the combined company.
• The company has operated over 1,626 flights with a 43% repeat flying rate and operates in Maharashtra and Karnataka.
• The transaction is expected to close in 2024, pending regulatory and stockholder approvals.
• The deal includes capital commitments of $20 million from Investor, including equity purchases, promissory notes, and convertible preferred shares.
• Hunch Ventures has committed to investing $3 million in convertible preferred shares of PubCo.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The announcement highlights a significant business combination that provides Hunch Mobility with access to public markets and capital. However, the deal is subject to risks and uncertainties, and the company has a limited operating history.

Positives

• Hunch Mobility gains access to public markets and capital to expand its urban air mobility services.
• The company has a first-mover advantage in the Indian market.
• The transaction includes significant capital commitments to fund growth.
• Hunch Mobility has a proven track record with over 1,626 flights and a 43% repeat flying rate.
• The company is addressing a significant market need in India, where urban congestion is a major issue.

Negatives

• The transaction is subject to regulatory and stockholder approvals, which could delay or prevent the deal from closing.
• The deal is subject to redemptions by DSAQ's public stockholders, which could reduce the amount of cash available to the combined company.
• Hunch Mobility has a limited operating history and a history of net losses.
• The company's operations are currently limited to the Indian subcontinent.

Risks

• The inability to successfully close the business combination.
• Regulatory and stockholder approvals may not be obtained.
• Redemptions by DSAQ's public stockholders could reduce available cash.
• Failure to realize the anticipated benefits of the business combination.
• Uncertainty regarding the costs related to the proposed business combination.
• Risks related to the rollout of Hunch Mobility's business strategy, including the use of electric vertical aircraft.
• Cybersecurity risks and data breaches.
• Domestic and international political and macroeconomic uncertainty.
• Reliance on third-party aircraft operators and technology leased from Blade Air Mobility, Inc.
• Potential legal proceedings following the announcement of the business combination.

Future Outlook

The combined company aims to capitalize on India's rising urban congestion issues and transform transportation through urban air mobility services, with plans to introduce electric vertical aircrafts (EVAs) in the future.

Management Comments

• Amit Dutta, Managing Director of Hunch Mobility, stated that the business combination will enable the company to fully leverage its first-mover advantage and expand its footprint in the Indian subcontinent.
• Dave Wentz, Chairman and CEO of DSAQ, believes Hunch Mobility has the team in place to execute on the tremendous opportunity to provide consumers with an option to avoid congestion at a reasonable price point.

Industry Context

This announcement reflects the growing interest in urban air mobility solutions to address traffic congestion in densely populated areas, particularly in emerging markets like India. Several companies are exploring similar concepts, including partnerships with electric vertical aircraft (EVA) manufacturers.

Comparison to Industry Standards

• Hunch Mobility's focus on the Indian market differentiates it from companies like Joby Aviation and Archer Aviation, which are primarily focused on the US market.
• The company's partnership with Eve Air Mobility, Beta Technologies, Skyports, and Jaunt Air Mobility aligns with the industry trend of collaborating with EVA manufacturers to develop sustainable air mobility solutions.
• The implied enterprise value of $223 million is relatively small compared to other publicly traded urban air mobility companies, reflecting the early stage of the Indian market.

Stakeholder Impact

• Shareholders of Hunch Mobility will receive equity in the combined company.
• DSAQ stockholders will have the opportunity to participate in the growth of the urban air mobility market in India.
• The transaction could create new job opportunities in the Indian aviation sector.
• Customers in India may benefit from improved transportation options and reduced travel times.

Next Steps

• DSAQ and PubCo will file a Registration Statement with the SEC, including a proxy statement/prospectus.
• DSAQ will mail the definitive proxy statement to its stockholders to vote on the proposed business combination.
• The transaction is expected to close in 2024, subject to regulatory and stockholder approvals.

Key Dates