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  • Dusan Mijailovic

AeroFarms, vertical farming start-up, going public in a $1.2 billion SPAC deal

Since merging with a special purpose acquisition company, AeroFarms, a US indoor manufacturer of leafy greens and herbs, is expected to go public at a $1.2 billion value, the newest in a long line of agriculture or food tech firms aiming to cash in on the green investing boom.

Spring Valley, a "sustainable Spac" established by Pearl Energy Investment Management, will join forces with the vertical farming start-up to raise more than $350 million, allowing it to grow operations and invest in R&D.

In recent years, vertical farms have gained attention as a sustainable way to grow vegetables without pesticides and with less water. Stack crops cultivated under artificial light without soil in farms near cities have been heralded as the future of agriculture, delivering fresher produce with more flavour and nutrients preserved directly to consumers.

As the pandemic shows the fragility of supply chains, the industry has benefited from increased worries regarding food security.

The number of calls about AeroFarms' facilities grew last year, due to the sight of empty shelves in supermarkets, according to David Rosenberg, the company's founder and CEO. Many governments and companies had seen a rising need to “de-risk the food supply chain and have local food production at scale”, he added.

Investors have now come from northern and Middle Eastern countries, where the environment and weather make agriculture difficult. The venture capital arm of Ingka Group, which is part of the Ikea retail empire, was an early investor, as was the state fund Abu Dhabi Investment Office, which invested the year before.

Following in the footsteps of AppHarvest, a high-tech greenhouse venture with a big facility in Kentucky, the AeroFarms Spac deal was announced.

Food tech and agritech companies have increased their stock market listings as a result of the growth of environmental, social, and governance-influenced investment.

Although SPAC deals provide start-ups with access to a greater pool of funding and allow investors to invest in early-stage businesses that were historically only open to venture capitalists and affluent private investors, they often come with a higher degree of risk.

Since the lock-up time for early buyers expired this month, AppHarvest's stock plummeted. It is currently trading at just under $18 per share, less than half of its February record.

The transaction was scheduled to close at the end of the second quarter, according to AeroFarms. The firm runs a commercial farm in New Jersey and is also developing facilities in Abu Dhabi and Virginia. It predicts sales of $4 million this year and $330 million in 2025, including $82 million in earnings before interest, taxes, depreciation, and amortisation.

Plants and seeds for use in vertical farms, as well as proprietary technologies, have been developed by the company, which it hopes will become a different revenue source from its produce sales.


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