BigBear.ai, a cyber and data analytics company cobbled together through several acquisitions last year by a private equity firm, is going public this year and is valued at nearly $1.6 billion.
BigBear.ai, which is a portfolio company of AE Industrial Partners
(AEI), as entered into a merger agreement with the special purpose acquisition company (SPAC) GigCapital4 [GIGGU], which will result in BigBear.ai becoming a publicly traded company. The deal is expected to close during the third quarter, at which time BigBear.ai, Inc. is expected to be listed on the Nasdaq.
BigBear.ai said it expects to receive about $330 million in cash through the transaction, which will go toward expansion in commercial markets, sales and marketing, research and development, and accretive mergers and acquisitions.
BigBear.ai has more than 550 employees, had $140 million in sales in 2020, a backlog of about $500 million and largely serves the intelligence community, Department of Defense and federal government customers. The company’s data analytics platform is based on artificial intelligence (AI) and machine learning (ML).
“We also see a ripe opportunity in the growing commercial market, as companies dedicate their budget to technology that allows them to harness the power of AI and ML for predictive analytics and forecasting capabilities to manage risk and capitalize on opportunities,” Dr. Reggie Brothers, BigBear.ai’s CEO, said in a statement. “In GigCapital4, we found a like-minding strategic partner that shares our vision for the future of data-driven decision dominance, and this business combination will help us drive growth as a public company.”
Before joining NuWave Solutions last summer, Brothers was chief technology officer at Peraton. He also led the Science and Technology Directorate at the Department of Homeland Security during a portion of the Obama administration.
AEI acquired NuWave in June 2020, and then added BigBear Inc., ProModel Government Services and PCI Strategic Management to create BigBear.ai in February.
BigBear.ai said its market outlook is bright. The broader AI/ML market is forecast to grow from $58 billion worldwide in 2021 to $310 billion by 2026, a 40 percent compounded annual growth rate. The near-term business opportunity pipeline for the company is $4.5 billion.
The company expects to generate $182 million in sales this year, $277 million in 2022, rising to $764 million in 2025 with adjusted operating income growing from $23 million in 2021 to $159 million in 2025. The company is also forecasting $18 million in free cash flow this year, rising to $120 million in 2025.
The forecast for sales in 2021 is weighted toward cyber and engineering work with revenue from analytics just under half the total. By 2025, analytics are expected to make up 75 percent of sales.
The company said its new business win rate is 93 percent and its recompete win rate 100 percent.
BigBear.ai said that 92 percent of its employees have security clearances. The company is headquartered in Columbia, Md.
Competitors include Palantir [PLTR], IronNet, Splunk [SPLK], Telos [TLS], Alteryx [AYX], and Everbridge [EVBG].
BigBear.ai’s financial advisor on the deal is William Blair and BMO Capital Markets is advising GigCapital4.
For AEI, the pending transition of BigBear.ai to a publicly traded company via a SPAC deal is the second in recent months for one of its portfolio operations. In March, Redwire, a space company that is part of AEI, also agreed to go public through an acquisition by a SPAC.
Once the deal with GigCapital4 is complete, existing BigBear.ai stockholders, including AEI, are expected to own about 73 percent of the company, public stockholders 21 percent, and GigCapital4 6 percent.