Freightos agrees to SPAC merger, reveals FedEx and Qatar Airways investments

Shipping boxes and a glass globe on a keyboard signifying digital trade.Freightos, backed by FedEx, is raising capital through a special purpose acquisition company and IPO.

Shipping boxes and a glass globe on a keyboard signifying digital trade.

Freightos, a fast-growing ocean and air freight marketplace similar to Expedia in air travel, announced late Tuesday it is going public through a merger with Gersher Acquisition Company.

The company will be listed on the NASDAQ exchange under the ticker symbol FROS.

The Freightos SPAC will have a pro forma enterprise value of approximately $435 million and could generate up to $166 million, although realized cash could be a quarter of that amount depending on the extent of Gersher’s pre-merger redemptions. The deal is small by SPAC standards.

The Tel Aviv, Israel-based freight technology startup also disclosed that its existing investors include Qatar Airways, the world’s largest cargo airline; FedEx (NYSE: FDX); the cargo division of International Airlines Group (British Airways, Iberia, Aer Lingus, Vueling, Level); and LATAM Airlines Group in South America.

The board of directors will include FedEx Logistics CEO Udo Lange and Guillaume Halleux, the chief cargo officer of Qatar Airways. The Loadstar pulled back the curtain on Freightos’ investors last week with the disclosure of the Qatar Airways and FedEx interests. 

The involvement of carriers in a neutral freight reservation site raises questions for some about conflicts of interest, but other logistics professionals say they aren’t concerned. Thousands of freight forwarders, for example, have participated for years in INTRAA, now part of E2Open, a multi-party booking site created by ocean carriers.

“Strict internal screens are in place to avoid directors associated with logistics companies being exposed to any data relating to their competitors,” the Freightos announcement said. The company previously disclosed non-industry investors but had not named the airlines.

Shawn Richard, vice president of global air freight at Seko Logistics, said Freightos should have publicly disclosed all its investors but added there likely won’t be “any long-term effects or brand damage.”

The Freightos booking platform typically connects shippers and freight forwarders, while freight forwarders make reservations with ocean and air carriers on sister site WebCargo. The systems also provide users extensive data about the status of their shipments. The company also publishes ocean and air indices of spot market freight rates.

Last week, WebCargo added a digital payment function allowing users to conduct an entire transaction without having to go to a third-party payment platform.

More than 30 airlines, many ocean carriers and dozens of trucking companies sell capacity on Freightos, which also counts thousands of freight forwarders and 10,000 importers and exporters as part of its ecosystem. WebCargo facilitated more than 100,000 e-bookings in the first quarter, according to Freightos.

Investment rationale

SPACs, also referred to as “blank check” companies, are investment vehicles set up by a management team that files for an initial public offering and then seeks out a target company to acquire and negotiate a buyout. Shareholders are invested in the acquired company.

SPACS are a way for small, private companies to access public markets without going through a time-consuming and expensive IPO. Experts say SPACS are out of favor and that many startups that took that route end up needing to raise more money.

“Last year, $22 trillion worth of goods crossed borders, but we have all witnessed what happens when shipping doesn’t run smoothly, creating inventory shortages and increasing prices that challenge businesses and consumers globally. This presents a massive opportunity to digitize one of the last large offline industries,” said Freightos CEO and founder Zvi Schreiber in a news release. “Our combination with Gesher and access to public markets will allow Freightos to continue to aggressively scale our platform and lead as an international freight booking and payment tool of choice.”

The combined entity has also obtained $80 million in capital commitments from investors, including another $10 million raise from Qatar Airways and $60 million from M&G Investments, with more than $80 million expected to come from the IPO. 

Pre-existing investors include SGX Group (Singapore Exchange Ltd.).

Freightos claimed a compound annual growth rate of 213% in valuation since the start of 2019 and more than 60% gross margins. 

“Freightos is modernizing the global shipping industry as a true innovator in the logistics space,” said Gersher (NASDAQ: GIAC) CEO Ezra Gardner. “It enjoys positive unit economics, high gross margins, an incredibly high growth rate, and impressive customer retention. It is distinguished by its proprietary technology, data analytics, and deep network of customers comprising some of the largest players in the global supply chain today. Following the combination, Freightos will be the only pure-play public global freight platform investment opportunity available, and we’re excited to partner with Zvi and his team on this enormous market opportunity.”

FreightWaves uses Freightos data in its SONAR platform, including the new Container Atlas that measures ocean spot rates, capacity and manifest data.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch. 

Related News:

Freightos Group acquires 7L Freight, expanding digital air cargo product