A new blank-check company based in Irvine with ties to one of OC’s larger multi-brand apparel companies, La Jolla Group Inc., is banking on the continued success of digital-first brands as it looks to raise as much as $150 million in a proposed initial public offering.
Revelstone Capital Acquisition Corp.’s IPO plans as a Special Purpose Acquisition Company, commonly known as a SPAC, mark the second Orange County consumer goods-related venture to propose going public this year, after tactical gear maker and retailer 5.11 ABR Corp.’s IPO plans were made official last month.
The two deals have pumped some life into what’s been a largely quiet period for local apparel and retail companies seeking a Wall Street listing.
Western retailer Boot Barn Holdings Inc. (NYSE: BOOT) went public in 2014, raising some $80 million, while fellow Irvine-based Tilly’s Inc. (Nasdaq: TLYS) raised $124 million in its 2012 IPO.
SPAC Plans
Revelstone, which will use its IPO proceeds to acquire an as-of-yet undetermined privately held firm and bring it public via a reverse merger, says its focus is not solely on apparel.
The underpinning of any potential acquisition, it says, would be a digital-first strategy in companies it said exist in the consumer, media or technology spaces.
“We believe that the market opportunity across the active consumer landscape is significant and has accelerated through the COVID-19 pandemic. Participation in sports and outdoor activities has accelerated over the last several years, and we believe health and wellness is as important as ever to the consumer,” the company said in a regulatory filing.
Executives at Revelstone Capital, an Irvine private equity and venture capital investment firm formed in 2017 that’s the parent to the SPAC, could not be reached for comment.
The company said it plans to price the offering’s 15 million shares at $10, the typical price for a SPAC listing. If the underwriters exercise their over-allotment option at $11.50 per share, Revelstone could ultimately raise $175.9 million.
Revelstone would trade on the Nasdaq under the ticker RCACU.
SPACs, which are given about two years to find an acquisition, have blossomed in recent years as a relatively quick way to get private companies onto publicly traded markets.
Several OC firms have gone public via this route in recent years, including Irvine’s Advantage Marketing Solutions Inc. and WM Technologies, the parent company of cannabis-focused software firm Weedmaps, while Newport Beach’s Roth Capital Partners and several other local investment firms have acted as an initial SPAC sponsor.
La Jolla Ties
Revelstone’s pinning part of its confidence in its management team’s business experiences, notably its ties to multi-brand apparel company La Jolla Group, for help with operations, finance and other back-end functions.
The company lists on its website apparel company La Jolla Group and its brands O’Neill, Spiritual Gangster, PSD and Hang Ten as examples of portfolio investments, along with action sports media company Teton Gravity Research, the Woo tracking app for kiteboarders, and men’s clothing brand Roark, among others.
La Jolla’s annual revenue companywide is expected to be about $200 million this year, according to the SPAC’s registration statement.
The SPAC shares the same Myford Avenue headquarters address as La Jolla Group.
Daniel Neukomm, who is co-CEO of Revelstone along with Morgan Callagy, also serves as La Jolla Group executive chair. Callagy has ties to La Jolla Group, too, as a director and advisor. He was also an early investor in the upscale leisure and activewear brand Spiritual Gangster.
The SPAC’s board includes Margaret McDonald, who is a director on the Spiritual Gangster board, and is also executive chair of Danish clothing label Masai Copenhagen. There’s also MTV Entertainment Group Chief Marketing Officer Jason White and entrepreneur and investor Jeff Rosenthal, the co-founder of Summit Series LLC, an organizer of conferences and events for entrepreneurs and activists.
La Jolla Group is expected “to be instrumental across the investment cycle, including sourcing, evaluating and conducting diligence on potential investments,” the filing said. The company would have a 3.5% stake in the business after the IPO.
Neukomm and Callagy would have a 4% stake in Revelstone following the offering.
The Irvine apparel company’s existing infrastructure would presumably come in handy, with Revelstone saying as much in its regulatory filing pointing out “we expect to leverage the La Jolla Group platform, sector expertise and network of relationships to evaluate and underwrite potential business combination targets.”
