The deal enables Acorns to become a publicly traded entity with trading expected to be on Nasdaq
Acorns Grow, a US-based saving and investing app, has agreed to merge with blank cheque company Pioneer Merger in a deal that values the combined business at around $2.2bn.
The merger with the special purpose acquisition company (SPAC) will enable Acorns Grow to become a publicly traded entity.
The enlarged company will be renamed Acorns Holdings, which is likely to trade on the Nasdaq Capital Market under the ‘OAKS’ symbol.
Acorns Grow’s current CEO Noah Kerner will continue in the same role post-merger.
Launched in late 2014, Acorns Grow is said to combine education, banking, investing, and earning into one cohesive experience through its app.
It operates on subscription-based pricing with three membership levels. The first of them is Lite, which covers basic investing, education, and earning tools.
The Personal membership level adds retirement, banking, and smart deposit tools, while the Family level has all individual products along with Acorns Early, covering investing, education, gifting, and rewards for the family.
The company is claimed to have more than four million subscribers in the US.
Acorns Grow’s customers get to invest automatically in what is said to be low-cost, diversified portfolios of exchange-traded funds provided by Vanguard, BlackRock, and other asset managers.
Its customers invest in any of the nine portfolios built with the help of economist Harry Markowitz. The company is said to use smart portfolio algorithms for automatically working in the background to enable users to build wealth.
Kerner said: “Going public will help elevate our story, introduce many more people to the power of compounding and financial wellness, and bring financial literacy to the mainstream.”
The merger will give Acorns a cash balance of more than $450m.
Furthermore, the deal is backed by a private investment in public equity (PIPE) participated by Wellington Management, Declaration Partners, Senator, The Rise Fund, Greycroft, funds and accounts managed by BlackRock, the global impact investing platform of TPG, and other institutional investors.
Pioneer Merger chairman Jonathan Christodoro said: “Acorns is not only a category leader but also a category creator. Its value proposition is built around inclusive, long-term financial wellness.
“With integrity at its core, the brand has an incredibly loyal following and market leading retention rates.”
The deal is expected to close in the second half of this year, should it get approval from SPAC’s stockholders and meet other customary closing conditions.