425: Investcorp AI Acquisition Corp. to Merge with Bigtincan, Eyes Nasdaq Listing

Investcorp AI Acquisition Corp. (IAAC) and Bigtincan Holdings Limited (Bigtincan) have announced a business combination agreement aimed at listing Bigtincan on the Nasdaq and unlocking its potential value.

Summary

• Bigtincan has entered into a Business Combination Agreement and Scheme Implementation Deed with Investcorp AI Acquisition Corp. (IAAC).
• The transaction includes a US $12.5 million investment commitment by Investcorp Cayman Holdings Limited, an affiliate of IAAC's sponsor.
• IAAC believes Bigtincan's current valuation on the ASX doesn't reflect its potential.
• The goal is to list Bigtincan on the Nasdaq to access deeper capital pools and attract talent.
• Investcorp aims to achieve private equity-style returns of around 3x on its investment over the medium term.
• An AI Technology Development Centre is planned for Hobart, Tasmania, to enhance Bigtincan's AI capabilities.
• Following the closing of the Transaction, it is expected that Investcorp will own approximately 20% of the equity of Bigtincan on Nasdaq at a cost per BTH share equivalent of roughly A$0.22.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the planned Nasdaq listing, Investcorp's investment, and the focus on AI innovation. However, risks related to the transaction's completion and market conditions temper the overall optimism.

Positives

• Nasdaq listing provides access to a deeper capital pool.
• Nasdaq listing is more attractive for acquiring and retaining talent.
• Nasdaq listing is a better reference point for gaining new customers globally.
• Investcorp's investment aligns interests and aims for a win-win outcome.
• The AI Technology Development Centre enhances Bigtincan's capabilities and solidifies its role as a leader in AI for sales enablement.
• Investcorp hopes to achieve favourable private equity style returns of around 3x on capital it deploys over the medium-term.

Risks

• The transaction may not close in the first quarter of 2025 or at all.
• The approval of Bigtincan shareholders of the Transaction may not be obtained.
• The approval of the shareholders of SPAC for the Transaction may not be obtained.
• The PIPE Investment may not be completed prior to the closing of the Transaction or at all.
• Even if the PIPE Investment is completed, it will not be sufficient to fund the execution of Pubco's business plan.
• The amount of redemption requests made by SPAC's shareholders may impact the amount of funds remaining in SPAC's trust account after the satisfaction of such requests.

Future Outlook

The document expresses optimism about Bigtincan's potential for growth and increased valuation following the Nasdaq listing and Investcorp's support, with a focus on AI innovation and strategic acquisitions.

Management Comments

• Harsh Shethia (Investcorp): Bigtincan fits the profile of the types of enterprise software businesses that Investcorp and its affiliates have been able to unlock value from in the past through a combination of supporting organic growth, tuck-in acquisitions, and value re-rating as a predominantly US business.
• Harsh Shethia (Investcorp): IAAC believes that the current valuation of Bigtincan shares on the ASX is not reflective of the potential of the business.
• Harsh Shethia (Investcorp): A Nasdaq listing will provide access to a deeper capital pool, be more attractive for acquiring and retaining talent, and be a better reference point for gaining new customers globally.

Industry Context

The announcement highlights the increasing importance of AI in sales enablement and the trend of companies seeking Nasdaq listings for better access to capital and talent, particularly in the technology sector.

Comparison to Industry Standards

• The document mentions the goal of achieving a 'rule of 30' (revenue growth plus EBITDA margin of 30%), which is a common benchmark for high-growth SaaS companies.
• Comparable companies in the sales enablement and AI space, such as Highspot, Seismic, and Outreach, often trade at higher valuation multiples in the U.S. market compared to the ASX.

Stakeholder Impact

• Shareholders may benefit from a higher valuation on Nasdaq.
• Employees may benefit from increased investment in AI and growth opportunities.
• Customers may benefit from enhanced AI-powered sales enablement solutions.

Next Steps

• Bigtincan shareholders need to approve the transaction.
• SPAC shareholders need to approve the transaction.
• The PIPE Investment needs to be completed.
• A registration statement on Form F-4 needs to be filed with the SEC.
• SPAC will mail a definitive proxy statement/prospectus and proxy cards relating to the Transaction to its shareholders entitled to vote at the extraordinary general meeting to be called by SPAC related to the proposed Transaction.

Key Dates