Perfect Corp, a Taiwan-headquartered beauty app developer spun off by facial recognition technology provider CyberLink, agreed a reverse merger with special purpose acquisition company (SPAC) Provident Acquisition Corp yesterday.
The combined entity will have a valuation of $1.02bn through the deal and take the spot on the Nasdaq Capital Market acquired by Provident when it went public in a $230m initial public offering in January 2021.
The merger will result in proceeds of $335m for Perfect including $50m in private investment in public equity financing from CyberLink, luxury fashion group Chanel, cosmetics manufacturer Shiseido and Snap, the owner of messaging app Snapchat, which was named an existing investor.
Investment group Ward Ferry Management and private equity firm Provident Group provided an additional $55m in connection with the deal.
Perfect has built a virtual reality software platform dubbed YouCam which uses artificial intelligence to help users identify and try on cosmetics products and beauty accessories to see if they suit individual features such as their skin, hair and nails.
The app is used by more than 420 brands across some 80 countries, such as makeup manufacturer Estee Lauder Companies’ Mac and Clinique products, according to Perfect. It also has agreements in place with shareholders Snap and e-commerce group Alibaba as well as Meta, the owner of social media platform Facebook.
CyberLink had participated in Perfect’s $50m series C round, which was led by investment banking firm Goldman Sachs in January 2021. It came after Alibaba led a series B round of undisclosed size also backed by Cyberlink and China Creation Ventures two years before.
CyberLink and China Creation Ventures had also contributed to a $25m series A round in 2017, investing alongside financial services group Yuanta Securities’ Yuanta Asia Investment vehicle and Extol Capital.
Perfect will use the proceeds from the merger to expand its presence from the United States and Europe to include Southeast Asia and the Middle East, in addition to exploring other virtual offerings beyond the beauty space, company founder and chief executive Alice Chang told Forbes.
Chang said: “Beauty product users do not just shop in physical stores, but also on social media and online sites – so we need to expand our technologies, not just on the brand side, but also on every platform.
“We want to become an augmented reality powerhouse, using our technology to solve different pain points of users in different areas and regions.”
The transaction is expected to close by the end of September this year, and was announced at a time when public listings have become scarce given volatile market conditions caused by a range of factors, most recently Russia’s invasion of Ukraine late last month.
After a strong 2021 for SPACs, this year has seen several such deals cancelled, including proposed mergers for telecommunications company Syniverse Technologies, financial savings app developer Acorns Grow and online insurance provider Kin Insurance.
Moreover, private equity firm Jeneration Group’s SPAC Jeneration Acquisition announced on Wednesday it had withdrawn its plans to go public, having filed for a $300m IPO a year ago.
PitchBook data shows reverse mergers with SPACs grew in number and size during 2021 and peaking in September, totalling $11.8bn across 25 deals. However, the figure decreased to $4.73bn across 15 deals the following month before waning further to $2.74bn across 10 such transactions in December.
Source: PitchBook
GlobalData’s database recorded 91 SPAC mergers equal to or over $50m in size in 2021 – against 43 the previous year – but eight were later terminated, including a proposed deal between SPAC Pathfinder Acquisition and corporate-backed field service management ServiceMax at a $1.4bn valuation.
Other corporate-backed companies that have called off reverse mergers in recent months include robotics technology developer Bright Machines, autonomous truck manufacturer PlusAI and drug discovery platform Valo Health.
Image courtesy of Perfect Corp.
