Offerpad to Become Publicly Traded Through SPAC Merger

Offerpad, a prominent player in the property technology sector, is set to enter the public market via a merger with a Special Purpose Acquisition Company (SPAC). This move signifies a new phase for the company as it aims for broader growth and market penetration.

Details of the Transaction

The Phoenix, Arizona-based firm revealed on Thursday its intention to merge with Supernova Partners Acquisition Company. The resulting entity will be valued at approximately $3 billion. Completion of this transaction is anticipated during the second or early third quarter of 2021.

Upon finalization, the newly formed company will operate under the name Offerpad Solutions and will be listed on the New York Stock Exchange, trading under the symbol “OPAD.”

Company Evolution and Growth

Established in 2015, Offerpad initially focused on the iBuyer model – directly purchasing homes from sellers online. However, the company has strategically expanded its services to become a comprehensive resource for individuals involved in real estate transactions.

Currently, Offerpad provides a range of services including home improvement financing, as well as title and mortgage solutions. To date, the company has secured $155 million in equity funding from investors like LL Funds, alongside substantial debt financing.

Transaction Volume and Financial Projections

Since its launch, Offerpad reports having facilitated 30,000 transactions, generating a gross transaction volume of nearly $7 billion. The company forecasts revenue of $1.4 billion for the current year, a significant increase from the estimated $1.1 billion reported in 2020.

This projected revenue represents substantial growth compared to the $100 million earned in 2016. Furthermore, Offerpad claims to have maintained “positive per-home contribution margins” consistently since 2016.

Looking ahead, Offerpad has set ambitious revenue targets, projecting $2.4 billion in 2022 and $3.9 billion in 2023. The company currently operates in 16 different markets, having recently added Denver and Nashville to its coverage area.

Leadership and Investment

Supernova Partners, the SPAC facilitating this deal, is spearheaded by Spencer Rascoff, a seasoned entrepreneur with extensive experience in the proptech industry. Rascoff previously co-founded Hotwire, Zillow, dot.LA, and Pacaso, and served as CEO of Zillow for nearly a decade.

Notable investors in the PIPE (Private Investment in Public Equity) include funds managed by BlackRock and Zimmer Partners, as well as national homebuilder Taylor Morrison Home Corp.

Strategic Rationale and Market Opportunity

Offerpad believes that becoming a public company through this partnership with Supernova will enable it to accelerate its expansion and capture a larger share of the market. The company currently serves over 900 cities and towns nationwide and intends to broaden its reach across the country.

Rascoff expresses strong confidence in Offerpad’s potential, stating the company “is incredibly well-positioned to grab a huge piece” of the online real estate market.

He further notes that iBuying represents a largely untapped segment of the real estate sector, one of the world’s largest addressable markets. Rascoff emphasizes the growing consumer demand for online real estate solutions, contrasting the industry’s current “analog” state with the digital transformation seen in sectors like grocery, automotive, and pharmaceuticals.

Competitive Landscape

Offerpad operates in a competitive environment, facing rivals such as Opendoor, Redfin, and Zillow, among others.

Shareholder Structure

As part of the merger agreement, current Offerpad shareholders will retain 100% of their equity in the combined company and are expected to hold approximately 75% ownership upon closing. Offerpad’s founder and CEO, Brian Bair, will receive high-vote stock representing roughly 35% of the combined company’s voting power.

This follows a similar move by real estate technology firm Doma, which earlier in the month announced its plans to go public through a merger with Capitol Investment Corp. V, also valued at $3 billion including debt.