Sneaker enthusiast media firm Hypebeast gets Tom Brady and Jonah Hill as investors in US$353 million US SPAC merger

Hypebeast, a media-cum-e-commerce platform that focuses on fashion and design, said it will merge with US special purpose acquisition company (SPAC) Iron Spark in a deal that will value it at US$352.7 million, including debt, with a second listing on the Nasdaq.

Listed in Hong Kong since 2016, Hypebeast disclosed the merger in a stock exchange announcement on Monday. The merger with the SPAC will also inject up to US$167 million in cash into the firm, which was raised by the blank-cheque company from its Nasdaq initial public offering in June 2021.

Hypebeast has become one of the first Hong Kong-listed companies to seek a second listing in New York through a SPAC, rather than through a traditional IPO pitching its business directly to public investors. SPACs are shell companies created by promoters to raise financial war chests through a share sale to investors, using the proceeds to buy assets within a limited period of time.

“The Iron Spark team brings us knowledge that could help our business reach the next level,” said Hypebeast founder and CEO Kevin Ma. “A listing in the US would also help us engage with our audience there.”

As part of the deal, Hypebeast has also entered into an agreement with several private investors, including multiple celebrities, who together will invest about US$13.3 million worth of Hypebeast shares, subject to the completion of the merger.

The investors include tennis star Naomi Osaka, American football player Tom Brady, and actor Jonah Hill, who played the character Donnie Azoff in the movie The Wolf of Wall Street, according to Ma. The private investors will together own about 2.5 per cent of the merged company, according to the stock exchange announcement.

Started as an online blog about collectible sneakers in 2005, Hypebeast has since developed into an e-commerce platform that sells streetwear and high-end fashion. It boasts over 26 million social media followers and 15.6 million monthly visitors.

How Hypebeast went from sneaker blog to global streetwear force

Hypebeast expects its revenue for the 2022 financial year, which ended in March, to reach US$112 million, up 29 per cent from the previous year. The SPAC merger therefore values the company at about 3.1 times its expected annual revenue.

“The company intends to curate and seek new Web 3.0 and metaverse-linked opportunities within the next 12 months,” Hypebeast said in its Hong Kong filing. Last year, the company held its first non-fungible token (NFT) sales.

In addition to sports and streetwear brands such as Nike and Adidas, Hypebeast’s other clients include luxury brands such as Dior, Gucci, Louis Vuitton, Chanel, and Balenciaga, according to its website.

To complete the merger, Hypebeast will issue up to 22.2 million shares, at US$10 each, to the SPAC’s existing shareholders. Upon completion, Iron Spark will become a wholly-owned unit of Hypebeast.

This would set Hypebeast’s US stock price significantly higher than its Hong Kong closing price of 81 HK cents (10 US cents) last Friday. Hypebeast said in its stock exchange announcement that each share issued to the SPAC investors represents roughly 68.5 of the company’s Hong Kong shares.

Beauty tech firm Perfect to merge with US blank-cheque company in US$1 billion deal

Under the SPAC arrangement, Ma’s stake will be reduced to 40.5 per cent, from 72.3 per cent at press time, according to its Hong Kong filing. With about 450 employees in Hong Kong, its net profit for the first half of the last financial year reached HK$63.9 million, triple its profit in the same period in the previous year.

The deal is now pending approval from the shareholders of the SPAC and Hypebeast, in addition to other regulatory clearance. It plans to list on the Nasdaq under the ticker HYPE, changing from the SPAC’s ticker ISAA.