Metaverse company Infinite Reality will go public through $1.85B SPAC

Infinite Reality, a company that takes companies into the metaverse, announced plans to go public through a special purpose acquisition company, or SPAC. The company plans to raise at least $128 million at a valuation of $1.85 billion.

Per the agreement, Infinite Reality would combine with Newbury Street Acquisition Corporation (NASDAQ: NBST ), a publicly traded company that serves as an investment vehicle. Infinite Reality said it is working with some of the world’s biggest brands, including Warner Bros. Discovery Sports, to foster immersive virtual experiences and new monetization opportunities in Web3-enabled showrooms and events.

In July, Infinite Reality acquired esports company ReKTGlobal for $470 million in stock. That deal valued the combined entity at $2.5 billion.

In an interview with GamesBeat, CEO John Acunto said the company isn’t yet disclosing information about investors in the PIPE deal.

Acunto said the company isn’t yet disclosing any financials like whether it was profitable or not. He said the company is in transition and “hyper-accelerating into creating immersive experiences for our customers.” He said the $128 million figure does not include any money from a PIPE.

As for the change in valuation, Acunto said that shows how the “macroeconomics in the world” have change the dynamics of the valuation.

“We actually feel very good about valuation, being able to meet the rigorous [analysis],” he said. “And we look at other businesses that have similar assets having at 90% decreases in the market. This is a big win for us.”

As to whether gaming will lead the way to the metaverse, Acunto said he didn’t really subscribe to that, despite buying the RektGlobal business. Acunto said the deal with RektGlobal, which had an esports business, focused on connecting brands with immersive experiences.

“Certainly, gamers have been in the metaverse for quite a while. They’ve been able to live in these communities and socialize and participate in many ways,” Acunto said. “I think what what people are not recognizing is just the level of quality of the products that are coming out calling themselves metaverses on the level of these video games. For us, that’s why we work hard to help brands create amazing immersive experiences. So they can interact with these audiences, such as gamers, with these amazing experiences. We certainly see gamers as one part of it, but definitely not necessarily the first early adopters.”

The transaction is expected to enhance the company’s offering of immersive audience experiences and commercial monetization opportunities. The transaction will add considerable proceeds to Infinite Reality’s war chest.

“Our team was blown away by the opportunity Infinite Reality has to truly revolutionize how people
experience the internet in the future,” said Newbury CEO Tom Bushey, in a statement. “Infinite Reality has the expertise, innovation, and scale to be a trailblazer helping brands connect directly with their audiences and customize their Metaverse experiences. Online commerce and entertainment will never be the same again. The creative talent and experience of this team sets Infinite Reality apart and all of us at Newbury are excited to be their long-term partner.”

After payment of transaction expenses, the net proceeds will be used to continue to build out
Infinite Reality’s infrastructure, expand its teams, begin robust marketing of the products and services, finance future acquisitions, and for other general corporate purposes.

The company said some of its value is that it’s already trusted by some of the world’s biggest brands. Infinite Reality said it is charting a new path for companies, sports teams, celebrities, influencers, and other creators to foster immersive personal connections and commercial opportunities in Web3-enabled events and showrooms. Moreover, it said it makes it easy to enter the Metaverse, without requiring special hardware, headsets, or equipment.  

Acunto said the goal is to deliver high-quality experiences.

“We see [the metaverse] as allowing content creators to connect to audiences in an immersive way, and to bring brands and reach those audiences in those experiences,” Acunto said. “You see that triangle approach with what we built with Warner Discovery.”

Transaction details

The transaction between Infinite Reality and Newbury Street is secured by PIPE (private investment in a public equity) financing. This additional pool of money can be used to ensure that Infinite Reality meets the minimum financing requirements for the merger to complete.

The transaction values the combined company at an equity value of approximately $1.85 billion, and it will make $128 million available to it.

Upon completion of the deal, NBST will change its name to Infinite Reality, Inc., and the combined company’s common stock is expected to be listed on the Nasdaq under the new ticker symbol.

After payment of transaction expenses, the net proceeds will be used to continue to build out
infrastructure, expand teams in Europe, Asia, and the United States, accelerate marketing of Infinite Reality’s
products and services with a focus on sports and entertainment, music, broadcast, and brands, and to
finance future acquisitions.

All current iR shareholders are rolling their existing equity. Shareholders of Newbury will also receive a contingent value right as part of the transaction as a result of which they may be entitled to receive additional shares of the combined company under certain circumstances. The completion of the proposed business combination is subject to approval by shareholders of both Infinite Reality and Newbury, as well as regulatory and other closing conditions.

In particular, most SPACs require a certain amount of funding after the shareholders vote to close the deal and after they vote on whether or not they want to cash out or remain invested in the combined company.

Fried, Frank, Harris, Shriver & Jacobson LLP is serving as legal counsel to Infinite Reality, along with
Bryan Cave Leighton Paisner, LLP. Ackerman LLP is serving as legal counsel to Newbury along with
Ellenoff Grossman & Schole LLP.

Newbury Street Acquisition Corporation is a blank check company formed for the purpose of entering
into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or entities. The company is led by Bushey and Kenneth King, chief financial officer.

“We see the metaverse is really about creating immersive experiences, allowing our customers to build those experiences, to own the data, be able to use their imagination to create experiences that their customers want to allow them to open their customers and create real value in the space,” Acunto said. “But we don’t see that as a single place.”

It’s not like in the 1990s, when a company like AOL dominated the internet business, he said. The parallel today is Facebook changing its name to Meta to try to grab the market opportunity first.

“It is a much broader format, to which many different businesses will be able to take their creative ideas and apply them in a way that helps their business plan,” Acunto said.