Rivian electric-truck maker to pay off IPO investors with new shares

The Rivian electric-truck maker is seen as a victim of its own success. The stock is up more than 80% since it went public May 9, and the company plans to get rid of most of its existing stock.

Rivian Electric Vehicles, the U.S. company that made a stunning splash on Wall Street earlier this month with its initial public offering, is taking it easy on investors: The startup plans to convert itself into a public limited partnership, paying off its IPO investors with its new shares.

The company’s shares surged 85% on the day of its IPO, and jumped as much as 146% to a $40.26 intraday price on Tuesday. The stock closed at $41.68.

The gain represented a 10.7X increase from the May 9 IPO price of $15 per share. The stock climbed as high as $49.59, a 46.3% increase from its first day of trading. The IPO-higher was the biggest gain on a U.S. share deal since 2014.

Rivian specializes in electric trucks, which it says have all the attributes of luxury diesel vehicles.

But it didn’t exactly have much time to get from the drawing board to stock market investors. The company debuted on the Nasdaq exchange on Friday.

Rivian Electric Vehicles and its venture backer, Chinese group GSR Ventures, raised $168 million during the IPO.

By Wednesday, the IPO proceeds were being used to retire about one-fifth of the stake held by the company’s venture backer, GSR Ventures. About $180 million would go to GSR.

Those shares will be converted into common stock and then canceled, effectively removing them from the publicly traded market. (Profit tied to those shares would not be recovered.)

“We intend to become a publicly traded limited partnership and to pay a distribution in the form of Class A shares to our Series A and B Preferred shareholders,” said Ryan Chatfield, chief executive of Rivian, in a filing. “This amendment is intended to simplify our capital structure.”

The company and its earliest investors received 16.8 million shares in the IPO. After the conversion, which may take as long as 30 days, they would hold 24.5 million shares.

Rivian, which plans to sell trucks powered by lithium-ion batteries, didn’t specify exactly how much it planned to pay off its IPO investors with its latest share price.

The cheapest shares were of Class A stock, owned by the company’s early investors and obtained for $15 apiece. These were set aside for retail investors.

Class B stock, owned by GSR and other early investors, was sold to investors on a pro rata basis.

GSR Ventures was originally picked by Reuters as the owner of the Rivian electric truck patents. Several Reuters reporters in China, where GSR is based, said in a story published Friday that this was incorrect.

Reuters previously has corrected the story on the Reuters website to note that GSR Ventures held the patent for the Rivian electric truck design and that Reuters reporters interviewed three people who were familiar with the situation. A fourth person told Reuters that they were unsure who owned the patents for the Rivian electric truck design.

An earlier version of the story incorrectly said that GSR Ventures had exercised a short-lived option to acquire the patents.

While the news service acknowledges that Reuters was informed of the correct information by GSR Ventures, it has corrected the headline and adds additional disclosure of other sources. The story was published in the US, but the article was originally written in China.

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