The Nightcap: SPACs Love the Leafy Greens

Looks like indoor farming is back on the menu in SPACland with Bloomberg reporting that Berlin-based Infarm is in advanced talks with Kernel Group Holdings, Inc.

To refresh your memory… Spring Valley Acquisition Corp. announced a merger with AeroFarms back in March and AppHarvest received approximately $475M of gross proceeds after completing its merger with Novus Capital Corp back in February.

AppHarvest announced today that it secured a $75M credit facility to “fuel expansion of its rapidly growing network of high-tech controlled environment agriculture (CEA) facilities in Central Appalachia.” The company currently operates a 60-acre facility with 2 more under construction and plans to have 12 high-tech farms by the end of 2025.

Local Bounti Corp., an indoor agriculture startup, has agreed to go public through a merger with Leo Holdings III Corp., a blank-check firm, according to people with knowledge of the matter.

The transaction, which could be announced as soon as Friday, is set to value the combined entity at about $1.1 billion, the people said, asking not to be identified discussing a private matter. To support the deal, Leo Holdings III raised $125 million via a so-called private investment in public equity, or PIPE, from investors including Fidelity Management & Research Co. and Cargill Inc., the people said. Cargill is additionally slated to provide $200 million in debt financing, they added.

Representatives for Local Bounti, based in Hamilton, Montana, Leo Holdings III and Fidelity declined to comment. A representative Cargill didn’t immediately respond to requests for comment.

Founded in 2018 by co-CEOs Craig Hurlbert and Travis Joyner, Local Bounti focuses on the sustainable production and delivery of fresh produce. Its proprietary technology grows leafy greens such as romaine and butter lettuce and herbs like cilantro and basil using 90% less land and water than traditional agricultural methods, and without pesticides or herbicides.

AeroFarms is now positioned to be a potential industry leader with access to considerable amounts of cheaper capital from the public markets. Additionally, as industry consolidation begins over the next few years, AeroFarms has both highly liquid public stock, as well as cash, to buy acquisition targets. Given that other vertical farming companies will need to respond to this advantage, I expect that most will likely pursue the public listing route.

The big question now is not whether the AeroFarms deal will herald a new era for public listings for indoor farming companies, which is all but certain to happen, but rather whether we are entering a period of public market activity for the broader AgTech & FoodTech sector. According to AgFunder, global investment in AgTech and FoodTech reached an all-time high of $15.8 billion in 2020. A consequence of the failings of the food & ag supply chain, worsened by COVID-19 during the past year, was that investors have been drawn to ag biotech, alternative protein, food waste mitigation, indoor farming, and robotics & automation companies that are using technology to drive innovation throughout the food & ag value chain.  Furthermore, more AgTech and FoodTech companies are generating meaningful commercial revenue and have developed sustainable business models that provide a realistic path to profitability. 

Given the growing interest from investors, including environmental, social, and governance (ESG) & impact, in private AgTech and FoodTech companies over the past couple of years, it is reasonable to ask whether the sector will follow a similar trajectory as the mobility sector, which had its best year ever, with over 15 public listings in 2020.

Bowery Farming, CropOne, 80Acre Farms, Freight Farms, InFarm, Iron Ox, Plenty, Shenandoah Growers, Square Roots, and TruLeaf.

Mirion Technologies is a leading provider of detection, measurement, analysis and monitoring solutions to the nuclear, defense, medical and research end markets. The organization aims to harness its unrivaled knowledge of ionizing radiation for the greater good of humanity. Many of the company's end markets are characterized by the need to meet rigorous regulatory standards, design qualifications and operating requirements. Headquartered in Atlanta (GA – USA), Mirion employs around 2,500 people and operates in 13 countries.