US: indoor farming business valued at $1.1bn in SPAC deal

Local Bounti to make $525m in proceeds via reverse merger as it eyes US expansion

US indoor agtech company Local Bounti has entered into a $1.1 billion reverse merger deal with special purpose acquisition company Leo Holdings III.

The transaction will provide Local Bounti with $400 million in gross proceeds with an additional $125 million in PIPE via institutional investors Fidelity Management & Research Company LLC and BNP Paribas Asset Management Ecosystem Restoration Fund, and strategic partners Cargill and Sarath Ratanavadi of Gulf Energy Development Public Company Limited.

Major agrifoodtech group Cargill will also invest $200 million in debt financing to accelerate Local Bounti’s expansion plans.

The company is planning to use the capital to build local indoor farming facilities across the US while continuing its strong commitment to ESG practices and standards.

Local Bounti’s proprietary technology operates a cultivation process that uses 90% less water and land than conventional agriculture.

It is on target to more than double the size of its flagship indoor farm facility and break ground on additional facilities before the end of 2021.

Local Bounti co-founder and co-CEO Craig Hurlbert said of the deal: “We look forward to leveraging our proven business model as we accelerate the building of cutting-edge local production facilities that feature our proprietary IP, referred to as Stack & Flow Technology and transforming conventional agriculture practices for the benefit of all our customers, no matter where in the world they’re located.”

The transaction is expected to close in H2 2021 and Local Bounti will list on the New York Stock Exchange under the ticker symbol LOCL.

Morgan Stanley and Nomura Greentech served as Local Bounti’s financial advisors, while Orrick Herrington & Sutcliffe acted as the company’s legal advisor.

SPACs are a growing trend in the agrifoodtech space as companies seek to fast-track the IPO process.