Rubicon Going Public in $2 Billion SPAC Deal

A software company that manages waste and recycling for customers, Rubicon partners with thousands of recycling and hauling firms to help businesses such as Apple Inc., Walmart Inc. and Starbucks Corp. save money and limit their emissions. The company also works with local governments in cities including Kansas City, Mo., and Baltimore.

The Lexington, Ky., company markets itself as a technology-driven alternative to traditional waste management. Rubicon aggregates large amounts of data to match a customer’s trash and recycling to the appropriate outlet, its founder and chief executive, Nate Morris, said in an interview.

“That data is what I think has been so powerful,” he said. “We’re running a play that we’ve seen work in every other industry.”

Rubicon investors include Mr. DiCaprio, Salesforce.com Inc. co-Chief Executive Marc Benioff, KKR & Co. co-founder Henry Kravis and billionaire investor Paul Tudor Jones.

The deal adds to the flurry of startups that are using SPAC mergers to inject cash into their businesses, allowing investors across Wall Street and Silicon Valley to make bets on companies that work to reduce carbon emissions.

SPAC mergers have exploded in the past few years, in part because they allow companies going public to make business projections that aren’t allowed in traditional initial public offerings. Also called a blank-check company, a SPAC is a shell entity that raises money and trades on a stock exchange with the sole purpose of merging with a private firm to take it public. After the private firm files detailed financial statements with regulators and the deal is approved, it replaces the SPAC in the stock market.

Despite heightened regulatory scrutiny of SPACs and recent share-price declines, new blank-check companies continue to rake in money. Nearly 600 SPACs have raised roughly $160 billion this year, eclipsing the total combined amount raised by blank-check companies through 2020, according to SPAC Research.

Rubicon, which was founded in 2008, is raising a $111 million PIPE, or private investment in public equity, as part of the SPAC merger. The PIPE investors include data-mining software firm Palantir Technologies Inc. and the government-backed New Zealand Super Fund.

That money and the roughly $320 million held by Founder SPAC, which went public in October, is to be used in an effort to accelerate the company’s growth, though SPAC investors can withdraw their money before the merger goes through. Such withdrawals have skyrocketed recently, with shares of many SPACs slumping.

Rubicon expects to post roughly $575 million in sales this year, a figure the company projects will rise steadily in the years ahead.

Write to Amrith Ramkumar at [email protected]