Trendy investors raise logistics cash through SPACs

Investors have poured hundreds of millions of dollars into the logistics sector in recent years, and they are increasingly raising those funds through special purpose acquisition companies (SPACs), one of the hottest recent trends in finance, a new report says.

For example, the warehouse robotics and automation provider Berkshire Grey said in February it will use a SPAC to take the company public. Also known as “blank check companies,” SPACs are publicly traded shell corporations that raise money to make future acquisitions of private companies, allowing the startups to begin selling shares much faster than launching a traditional initial public offering (IPO).

The trend affects a far greater segment of supply chain startups than just warehouse robotics. Over the past two years, more than $38 billion in pro forma equity valuations were attributed to the commercial vehicle space, backing strategic technologies for last mile, automation, and/or electrification/alternative fuels, according to the report from tech advisory firm ABI Research.

Financial investors are being drawn by the rapidly growing e-commerce delivery segment, pumping funds into companies like Electric Last Mile Solutions and Arrival, the firm said. And New York-based ABI expects associated telematics hardware shipments to grow by 29% over the next five years, as related SPACs in the supply chain industry are expected to reach a minimum of $15.2 billion this year.

“Multiple manufacturers from Nikola to Proterra, Lordstown, Lion Electric, Hyzon Motors, Einride, and Plus require significant capital to enable full production, with investors ramping up SPAC’s and joining in bidding wars in some cases,” Susan Beardslee, ABI’s freight transportation and logistics principal analyst, said in a release.

“Despite the excitement, investors need to approach with caution as celebrities enter the SPAC frenzy and some previously lauded SPACs have been investigated and/or have seen their values dip post IPO. Continued focus on transportation, logistics, and the supply chain will bring new, exciting IPO’s although not all will take the SPAC path,” Beardslee said.

Despite the excitement, investors need to approach with caution as celebrities enter the #SPAC frenzy and some previously lauded SPACs have been investigated and/or have seen their values dip post IPO. #transportationindustry #commercialtrucking https://t.co/lH5n03SP89

— ABI Research (@ABIresearch) April 22, 2021