EVgo shares plummet after 23M shares are sold by the biggest investor

The Key Takeaways

• EVgo has announced its largest shareholder will sell 23 million Class A common shares.
• Electric charging station operators reported that EVgo Holdings – an affiliate of LS Power Equity Partners – would offer to underwriters a 30 day option to purchase another 3,45 million shares.
• EVgo won’t receive any money from this sale.

The shares of EVgo, the operator of electric vehicle charging stations (EV), were sold short when it announced that its largest shareholder would be launching a secondary stock offering.

The company has reported that EVgo Holdings (an affiliate of LS Power Equity Partners) plans to sell 23 millions shares of class A common stock. They intend to grant the underwriters a thirty-day option to acquire an extra 3.45 million at the price of the public offer. 

EVgo has stated that the company will not put any shares on the open market and all proceeds from this sale are going to LS Power.

The company noted in a regulatory filing that "LS Power, the Selling Stockholder in this offering, owns the majority of our voting stock." It added that because of those large holdings, "LS Power is able to substantially influence matters requiring our stockholder or board approval, including the election of directors, approval of any of our potential acquisitions, changes to our organizational documents and significant corporate transactions."

While EVgo did not detail EVgo Holdings' Class A stock stake, the company did show that it owns 195.8 million shares of Class B stock, giving EV Holdings 66.5% of EVgo's total investor voting power.

In the last week, EVgo has closed on a $1.25B DOE loan

Last week, EVgo announced that it has closed on a $1.25-billion loan guarantee from the Department of Energy to install 7,000 EV charging stations across the nation over the next five year. Its warning about its future business was not taken seriously. “be materially and adversely affected” Shares would drop if the company failed to comply with loan terms.

EVgo shares are expected to grow by about 30% between now and 2024, despite a loss of approximately 25% shortly after the markets opened on Tuesday.

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