Renewable natural gas producer Opal Fuels plans to go public by merging with blank-check company ArcLight Clean Transition Corp II amid growing market interest in alternative energy investments.
White Plains, N.Y.,-based Opal said the business combination with the special-purpose acquisition (SPAC) company has an enterprise value of $1.75 billion, including debt, and will be listed on the Nasdaq under the ticker symbol “OPL.”
The deal includes a $125 million fully committed private placement in public equity at $10 per share, anchored by NextEra Energy, an affiliate of ArcLight, Electron Capital Partners, Gunvor Group, Wellington Management and AdageCapital Management.
It also includes up to a $100 million preferred equity investment from affiliates of NextEra Energy, the company stated.
“This transaction with ArcLight reflects a transformative step in our company’s development and strategy,” Opal Co-CEO Adam Comora stated in a release. The deal is expected to be completed in the second quarter of next year.
Comora commented that the renewable natural gas (RNG) Opal produces, which powers trucking fleets for companies such as UPS and Waste Management, realize “substantial savings” compared to diesel.
He called it a “right now solution to the right now problem of climate change.”
Co-CEO Jonathan Maurer added that the use of RNG as a transportation fuel is “an inflection point, and we are excited to leverage our expertise in renewable power to be a leader in RNG projects as we convert renewable power projects to renewable transportation fuel facilities.”
Opal, which is owned by the sustainability focused private investment firm Fortistar, was created late last year through the combination of three separate companies: Fortistar Methane Group, Fortistar RNG and TruStar Energy.
Opal’s deal is the latest in a growing list of green-energy SPAC transactions in recent months.
SPACs shell companies formed to raise money through an IPO to buy another company. They are sometimes preferred over traditional IPOs because they give companies greater access to capital.
SPACs can also have potentially lower transaction fees and can speed up the timeline to become a public company, which can then accelerate a company’s expansion.