Jerusalem’s Freightos To Go Public In $500 Million SPAC Merger

Special Purpose Acquisition Companies (SPACs) — blank check companies that go public with hopes of quickly merging with a private company — are way down, but not out.

How so? One such SPAC, Denver-based Gesher I Acquisition Corp. — which went public in November 2021 — is about to merge with Jerusalem-based Freightos, “a global leader in air-based shipping and a formidable player in sea-based shipping,”

The SPAC merger is scheduled to take place on NASDAQ on January 26. According to the Jerusalem Post, Gesher will invest $80 million at a $500 million valuation for the company which will adopt a new name and trading symbol Freightos (CRGO).

The SPAC merger will issue about 10% of Freightos stock to the public — generating at least $80 million in gross proceeds and putting $116 million worth in a trust account, according to The Loadstar.

If Freightos can achieve its ambitious growth goals, its newly public shares could be a good investment.

What is Freightos?

Freightos operates a platform that enables air and sea freight transportation. According to the company, Freightos' platform makes the supply chain more efficient and agile by “enabling real-time procurement of ocean and air shipping across more than ten thousand importers/exporters, thousands of forwarders, and dozens of airlines and ocean carriers.”

Freightos’s WebCargo leads the world in air cargo eBooking. WebCargo enables simple and efficient freight pricing and booking of “over a third of global air cargo capacity.” Its users include “thousands of freight forwarders, including the top twenty global freight forwarders, and hundreds of airlines, ocean liners and trucking carriers.”

Freightos’s Performance and Prospects

Freightos enjoyed rapid growth in traffic during 2022. According to PRNewswire, Freightos booked 668,000 transaction in 2022 — 154% more than in 2021 — a figure that exceeded “internal targets for both quarterly and annual” transaction volume. This growth reflected an increase in the number of users seeking to ship goods and carriers offering their services on the platform.

Freightos has ambitious goals for growth in revenue and cash flow. According to its prospectus, Freightos estimated that its 2022 revenues totaled about $19 million and it projected 90% average annual growth to $134 million by 2025. Meanwhile it projects that free cash flow will improve from -$18 million in 2022 to about $30 million by 2025.

SPAC valuations have fallen 95% from their high of about $2 billion in 2021 to $200 million in January 2023, according to the Wall Street Journal.

This did not deter Freightos. In a January 18 interview, CEO Zvi Schreiber told me, “We chose to go public via a SPAC because Gesher comes with high quality investors such as Prudential UK and M&G that are providing $16 million in investment that is locked up. They will be there long-term.”

What is driving Freightos’ growth? “Freightos is a high quality company that has been operating for 10 years. It is the largest marketplace in the industry. The supply chain industry is craving this technology and we think this transaction will create a new vertical that catalyzes the IPO market in the next 12 to 24 months,” he said.

Freightos sees a rapid growth trajectory. “We have reached critical mass for liquidity. It is achieving lift off and will add fuel for growth through geographic expansion from Europe and the U.S. to Asia. We will invest the proceeds in R&D, sales and marketing,” said Schreiber.

Freightos’ SPAC merger will bring more resources to Palestine. “We have offices in Jerusalem and Barcelona from our merger with Web Cargo. We have a large office with 100 employees in Ramallah. We also have people in the U.S., Canada, China, and India,” said Schreiber.

Why Gesher Partnered With Freightos

Gesher — which had 18 months to find a merger partner after it went public in November 2021 — seems happy to reach the finish line with Freightos. As Gesher CEO Ezra Gardner told me on January 18, “In any deal there must be an industrial logic to going public — demand on both sides, especially from large public companies — Freightos has that.”

Gardner also has a high opinion of Schreiber and Freightos’ ability to operate as a public company. “Zvi is an amazing operator. We are prepared for running Freightos as a public company. We beefed up the board; created formal committees, wrote formal HR policies; instituted an anonymous complaint line to report fraud, and added to the company’s finance and legal staff. The company will be transparent with public shareholders,” Gardner said.

A Leading Analyst Is Bullish on Freightos

A leading supply chain expert, Ben Gordon, Managing Partner and CEO, Cambridge Capital and BGSA, is bullish on the prospects for Freightos.

As he explained in a January 24 email, “Freightos has built a successful marketplace for global freight. They fought through the initial COVID challenges of 2020 and emerged as a winner. And their strengths lie in the depth of their marketplace, the range of their partners, and the quality of their data.”

Gordon also sees the value of technology in helping the logistics industry face its recent challenges. “In a volatile market, technology companies can add more value than ever. Shipping rates shot up close to ten-fold in 2021, and plunged by a similar amount in 2022. Shippers caught whiplash. But smart software users could anticipate and hedge their costs, in part through solutions like Freightos.”

He did not expect Freightos to use a SPAC. “I am surprised they were able to go public via SPAC. The last year has not been kind to unprofitable software companies. The basket of publicly-traded unprofitable software companies dropped 60%. And the revenue multiple dropped even further.”

Gordon sees the pending success of its SPAC merger as evidence of Freightos’ compelling performance and prospects. “It is a sign of Freightos’ strength that they are able to overcome these challenges. It also illustrates the sustainability of the supply chain sector.”