Brief: Container farming startup Freight Farms to go public for $147m via SPAC

• US-based Freight Farms, which provides container farming technology to the indoor ag industry, plans to go public via a merger with special purpose acquisition company (SPAC) Agrinam Acquisition Corp.
• The deal values Freight Farms at $147 million.
• The company says this move will enable it to “aggressively” scale its business.
• Freight Farms has raised $43 million to date from Aliaxis SA, Ospraie Ag Science, and others.

Why it matters:

SPAC IPOs and indoor farming have rather a lousy history together.

The two most high-profile SPAC announcements of the last few years have come from AppHarvest, which went public in 2021, and onetime unicorn AeroFarms, which wound up scrapping its listing plans. Both companies have since filed for bankruptcy as the indoor farming industry undergoes a correction.

There are factors separating Freight Farms from the aforementioned companies and others that operate the warehouse-sized farms.

First, its valuation is far lower than those AppHarvest and AeroFarms peaked at. But perhaps most importantly, the Boston, Mass.-based company doesn’t actually grow and sell its own produce. In the company’s own words, it is a “technology provider, not a grower, with proven customer economics.”

Freight Farms sells its modular container farms — which also come with proprietary software and a one-stop-shop for supplies like plant nutrients — to other entities that handle the growing and selling of the produce.

In controlled environment agriculture (CEA), consensus has for some time been forming around the idea that companies must decide what they want to be: a grower or a technology provider. A successful IPO for Freight Farms could further cement this idea into place, especially considering many of the “warehouse” companies that have shuttered or filed for bankruptcy have long attempted to be both grower and technology provider.

Under the terms of the companies’ letter of intent (LOI), Agrinam and Freight Farms will become a combined entity with existing Freight Farms’ shareholders exchanging 100% of their shares for equity in the combined public company.

Agrinam says it is targeting non-binding investment indications of approximately $20 million from its sponsors and “certain strategic investors of which $4 million has already been committed.”

The companies expect to reach a definitive agreement in the third quarter of 2023.

What they’re saying

“At Freight Farms, we found a dedicated technology company that had developed and is continuously improving systems that enable their customers to grow profitably and cost-effectively hyper-locally, as evinced by the operational success and repeat business of their farmers,” Zach Morse, a Freight Farms board member and analyst at Ospraie Ag Science, the company’s largest investor, said in a statement.

Freight Farms says it currently has more than 600 of its flagship product, the “Greenery S” container farm, in operation across 40 countries. It supplies not just farmers with its technology but also hospitality businesses, grocery retailers, food banks and educational facilities.

“Agrinam was formed with the focused mission to identify and merge with a differentiated agribusiness company with a strong track record and a sustainable financial model and we believe we have found that with Freight Farms and are very excited about where this company will be in the near future,” Agustin Tristan Aldave, CEO of Agrinam, the SPAC, said in a statement.