FaZe Clan is set to become a publicly traded company after the gaming organization announced plans that could see them become the first $1B company to emerge from the esports and gaming space. The move should be completed in Q1 of 2022 and will see the current ownership group maintain a majority stake in the company.
Rather than an IPO, FaZe will be merging with a special purpose acquisition company (SPAC), or "blank cheque company". This means the organization can fast-track themselves to being publicly listed, with the SPAC in this case being the B. Riley Principal 150 Merger Corp., backed by the B. Riley Financial Inc. According to FaZe’s own press release, “the proposed business combination transaction implies an equity value of approximately $1 billion for the combined company inclusive of nearly $275 million of cash…”.
FaZe CEO Lee Trink was quick to pay tribute to the fans that have made FaZe’s success possible when speaking about the potential deal. “We believe FaZe Clan is becoming the voice of youth culture, a brand that sits at the nexus of content, gaming, entertainment and lifestyle in the digital-native world. This transaction will provide us capital and access to the public markets, which will help us accelerate the expansion of our multi-platform and monetization strategy. We are so grateful to the millions of loyal fans who have helped us take FaZe Clan to the next level, without whom this would not have been possible”.
What is a SPAC merger?
Historically SPAC mergers have led to more negative financial outcomes for investors post-merger, and have often involved companies without a solid business plan or revenue model. SPAC deals have been popular with tech firms in recent years, with the likes of Buzzfeed and Draftkings both going down that path.
FaZe Clan, who describe themselves as "a leading digital content platform created for, and by, the Gen Z and Millennial generations", claim to have a global reach of more than 350M people, when combining their official channels and creators. The company has existed since 2010 and often courted controversy during their eleven years in the space.
The controversies include, but are not limited to scandals including signing underage players, entering into a lawsuit with one of their biggest creators TFue, and more recently a pump-and-dump crypto scam involving FaZe creators that centered around an initiative called "Save the Kids". Their owners are also no strangers to negative coverage, with both Ricky "Banks" Bengston and Norden "Rain" Shat having been accused of profiting from now-defunct CSGO gambling site CSGO Wild.