Shipping Platform Freightos Goes Public in SPAC Deal
Online freight booking platform Freightos Ltd. started trading shares publicly on Thursday through a merger with a special-purpose acquisition company, just as the booming shipping demand that helped fuel the digital startup’s growth shows signs of weakening.
Israel-based Freightos started trading on the Nasdaq under the ticker symbol CRGO and opened at $22.76 a share after the offering was priced at $10 a share, making it one of the biggest public stock offerings in the freight sector over the past year and defying a broader pause in new listings in an uncertain economic environment. Shares retreated in early afternoon trading to $16.60.
Freightos raised more than $80 million through its merger with Gesher I Acquisition Corp. The lead investors were British asset manager M&G PLC, which contributed $60 million. Qatar Airways Ltd. invested $10 million.
The company has seen booming business during the pandemic for its platform as shipping demand skyrocketed while tight capacity and supply-chain disruptions sent freight rates soaring. The Freightos platform operates like an Expedia or Travelocity for freight, allowing companies with goods to ship to compare prices and book space on planes and ships.
Freightos handled 668,000 transactions last year, a more than twofold increase from the prior year, according to company filings. The gross value of transactions on the platform also doubled to $611 million over the same period.
Freightos takes in revenue by charging its users fees for transactions. The company hasn’t yet released detailed year-end financial results for 2022, but reported third-quarter revenues of $4.7 million, up 56% over the year-ago period.
International trade volumes have retreated in recent months as the consumer spending that helped fuel goods flows has fallen back and shipping prices have tumbled while big retailers have pulled back on inventory restocking. The average cost of shipping a container on some of the world’s busiest trade lanes between Asia and the U.S. West Coast is down 91% compared with a year ago, at $1,323, according to the Freightos Baltic Index.
In a note to new shareholders on Freightos’ website Thursday, Zvi Schreiber, the company’s chief executive and chairman, recommended that investors view Freightos as a long-term investment. “Bookings on our platform are growing fast and consistently, but turning our growing transaction volume into massive revenue and profit will take time,” he said.
Mr. Schreiber said the investments will help the company increase transactions and develop technology.
SPAC mergers have dwindled in number over the past year after the maneuver, also known as a reverse merger, became a favored way of going public in recent years, particularly for tech startups looking to skip the rigors and scrutiny of the conventional initial public offering process.
Ezra Gardner, Gesher’s chief executive and a Freightos board member, said the SPAC gave Freightos more control than an IPO over whom the company’s main investors would be.
Mr. Schreiber, in his note to investors, said some SPACs “have gotten a bad reputation.” He said Gesher had brought “top-tier long-term investors” to the company and that firms “don’t normally get that kind of investor in a traditional IPO.”
Source: Wall Street Journal