Vertical farming start-up AeroFarms to list at $1.2bn valuation in Spac deal

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AeroFarms, a US indoor producer of leafy greens and herbs, is to go public at a $1.2bn valuation after merging with a special purpose acquisition company, the latest in a string of agricultural or food tech groups seeking to tap into the green investing boom.

The vertical farming start-up will combine with Spring Valley, a “sustainable Spac” formed by Pearl Energy Investment Management, to raise more than $350m, helping it to expand operations and invest in R&D. 

Vertical farms have come under the spotlight over the past few years as a sustainable way of growing vegetables without pesticides and with less water. With stacked crops grown under artificial light without soil in farms close to urban areas, they have been touted as the future of agriculture, delivering fresher produce straight to consumers, with more taste and nutrients intact.

The sector has also benefited from heightened concerns over food security as the pandemic highlights the fragility of supply chains.

AeroFarms founder and chief executive David Rosenberg said the number of calls about his facilities had jumped last year, helped by the sight of bare shelves in stores. 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.

The company has already attracted investors from northern and Middle Eastern countries, where the climate and weather conditions limit agriculture. Early investors include the venture capital arm of Ingka Group, part of the Ikea retail empire, while state fund Abu Dhabi Investment Office invested last year.

The AeroFarms Spac deal follows that of AppHarvest, a high-tech greenhouse venture with a large facility in Kentucky.

The rise in environmental, social and governance-influenced investment has led to a jump in stock market listings by food tech and agritech businesses.

While Spac deals offer start-ups access to a wider pool of capital and allow investors to put money in early-stage companies that have previously been accessible only to venture capitalists and wealthy private investors, their volatility means increased risk.

AppHarvest shares tumbled after the lock-up period for early investors ended this month. It is now trading just under $18 a share, less than half its peak in February.

AeroFarms said the transaction was due to close at the end of the second quarter. The company has one commercial farm in New Jersey and is building facilities in Abu Dhabi and Virginia. It expects sales of $4m this year and is projecting $330m in 2025, with earnings before interest, tax, depreciation and amortisation of $82m. 

The company has been developing plants and seeds for use in vertical farms as well as proprietary technology, which it hopes could become a separate revenue stream on top of its produce sales. 

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