This SPAC Found the Right Fit in CarID By Investing.com


© Reuters.

By Christiana Sciaudone

Investing.com — This auto parts company has nary a warehouse in sight, and that’s the plan. 

Onyx Enterprises connects customers — mostly comprised of gearheads, for now — to parts distributors via CARiD.com, an e-commerce company it owns and operates. Onyx is poised to go public in a merger with a special purpose acquisition company Legacy Acquisition Corp., which will change its name to PARTS iD, and move from specialty accessories and parts into repair and collision, a market 10-times the size of the one CARiD currently serves.

“There is a lot of competition in the market,” said Nino Ciappina, interim general manager at Onyx, in a video interview. “What makes us different is the tech infrastructure, which we purpose-built over the past 10 years.”

Here’s what CARiD says sets it apart: The technology to source 17 million SKUs — or stock keeping units, aka, individual products — and growing. Compare that to rival Carparts.Com Inc (NASDAQ:), which has about 830,000 SKUs, according to its most recent quarterly report. The rival also boasts more than 840,000-square-feet of warehouse space, and growing.

CARiD’s model does not require significant investments in distribution centers or inventory.

There are millions of parts and accessories given how many different models of cars are made each year — this is known as fitment — making servicing the market as a whole a challenge. 

“It creates an incredible amount of friction in this particular industry,” Ciappina said. E-commerce solutions that exist aren’t built for this kind of multidimensional industry. “We wanted to control the accuracy of the data.”

After the reverse merger, CARiD will have up to $55.5 million of cash on the balance sheet to fund future growth and potential acquisitions. The implied pro forma enterprise value is $331.1 million.

CARiD, which estimates it will bring in $401 million in revenue this year, has more than 800 partners and 2,800 shipping locations in the U.S. 

“We can offer a wide selection and get goods to consumers relatively quickly, regardless of what you’re ordering,” Ciappina said. “Our business model is completely unique.”

That was exactly what Legacy Acquisition was looking for. 

Legacy is led by a couple dozen former corporate executives and entrepreneurs, largely African-Americans, with years of experience at places like Procter & Gamble Company (NYSE:), Coty (NYSE:) and Maytag.

Legacy Chief Executive Officer Edwin Rigaud said he has made it a point to get underrepresented groups involved in capitalism.  

“The more talent we can bring to Wall Street, the better off we all are,” Rigaud said in the same interview. “There is African-American talent that’s been sitting there waiting to do things, and not knowing exactly how to do it. This is my legacy.”

Legacy went public in November 2017, raising about $300 million. 

“We have 25-plus experts who know how to look at an opportunity like this and really determine in depth to determine whether it’s the right fit for the right company and whether it has growth potential,” Rigaud said. “There aren’t other Spac teams that are comparable with the expertise that we have.”        

CARiD’s market specialty equipment and accessories — think, custom rims —  still represents the center of the business, but the focus is on building out product lines like repair that have a higher purchase frequency. After all, how often does one need new chrome rims?

“Our core objective is to win the automotive space, we know that’s the much bigger opportunity,” Ciappina said. “That is the quickest path to $1 billion in revenue.” 

CARiD sees a specialty equipment market of about $46 billion compared to more than $400 billion for the broader industry. That’s a lot of a warehouse space — if you need it.

   

 





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