AeroFarms, an American producer of green leaves and herbs, is expected to go public with a $ 1.2 billion valuation after the merger with a special purpose acquisition company, the latest in a number of agricultural technology groups or seeking to exploit the green investment boom.
The start of vertical agriculture will combine with Spring Valley, a “sustainable space” formed by Pearl Energy Investment Management, to raise more than $ 350 million, helping it to expand operations and invest in R&D.
Vertical farms have stood out in recent years as a sustainable way to grow vegetables without pesticides and with less water. With stacked crops grown under artificial light without soil on farms close to urban areas, they have been singled out as the future of agriculture, delivering fresher products directly to consumers, with more flavor and nutrients intact.
The sector has also benefited from increased concerns about food security, as the pandemic highlights the fragility of supply chains.
AeroFarms founder and chief executive David Rosenberg said the number of calls about its facilities had increased in the past year, helped by the sight of empty shelves in stores. Many governments and companies have seen an increasing need to “eliminate risk from the food supply chain and have local food production at scale,” he added.
The company has already attracted investors from countries in the North and Middle East, where the climate and weather conditions limit agriculture. Early investors include the venture capital arm of the Ingka Group, part of the Ikea retail empire, while the state-owned Abu Dhabi Investment Office fund invested last year.
AeroFarms Spac’s business follows that of AppHarvest, a high-tech greenhouse project with a major facility in Kentucky.
The increase in environmental, social and governance-influenced investment has led to a jump in stock market listings by food technology and agrotec companies.
While Spac’s businesses offer start-ups access to a broader pool of capital and allow investors to put money into early-stage companies that were previously accessible only to venture capitalists and wealthy private investors, their volatility means greater risk.
AppHarvest’s shares plummeted after the blackout period for early investors ended this month. It is now trading at just under $ 18 a share, less than half the peak in February.
AeroFarms said the transaction was expected to close at the end of the second quarter. The company owns a commercial farm in New Jersey and is building facilities in Abu Dhabi and Virginia. It expects sales of $ 4 million this year and projects $ 330 million in 2025, with earnings before interest, taxes, depreciation and amortization of $ 82 million.
The company has developed plants and seeds for use on vertical farms, as well as proprietary technology, which it hopes can become a separate revenue stream in addition to its product sales.