AppHarvest enters public market through $475m SPAC deal

AppHarvest has raised $475 million in a business combination with Nasdaq-listed special purpose acquisition company Novus Capital, which brings the indoor farm developer and operator into the public market.

Founder and chief executive Jonathan Webb told Agri Investor that plans for the SPAC were underway at the time of AppHarvest’s $28 million Series C in August.

“A way to be fully transparent in agriculture is to force the scrutiny of public markets,” Webb said. “We knew this was the way we wanted to go, and we built a company that could pursue the IPO track.”

In late September, Novus Capital listed its shares at $10 per share when it announced an initial SPAC agreement that valued AppHarvest at approximately $1 billion.

The Morehead, Kentucky-headquartered company’s common stock began trading Monday on the Nasdaq exchange under the symbol APPH at a price of $35.69 per share. It reached a high of $37.19 per share before closing at $35.85 on Monday. Tuesday saw AppHarvest shares open at $42.87 and reach a high of $42.90 before closing at $36.77 per share.

The transaction that brought Novus and AppHarvest together included a $375 million investment by Fidelity Management and Research Company and Inclusive Capital, a firm affiliated with ValueAct Capital founder and chairman Jeffrey Ubben. Inclusive owns 12 percent of outstanding shares in AppHarvest, according to a regulatory filing.

AppHarvest operates a 60-acre controlled environment agriculture facility in Morehead and has begun construction on another 60-acre indoor farm in Madison County, Kentucky. It is also building an additional 15-acre leafy green facility in Berea, Kentucky and began harvesting tomatoes produced in Morehead in January.

Capital raised through the SPAC transaction will be devoted to a pipeline of up to 12 large-scale indoor controlled environment farm projects planned through 2025. In December, AppHarvest hired Christopher Scott – formerly an executive with Dallas-headquartered commercial real estate services and investment firm CBRE – to oversee commissioning and construction of new farms.

“In the first couple of years, we are spending a lot of cash building facilities,” said Webb, adding that in the near-term focus will remain on a Central Appalachian region of the US that offers abundant rainwater and delivery logistics conducive to nationwide supply.

“As those facilities are built and come online, that’s how we are able to get a path to profitability,” he added.

Webb told Agri Investor in February 2020 that AppHarvest – whose existing investors include Equilibrium and S2G Ventures – had benefitted from affiliation with high-profile investors like Ubben, NBA player Blake Griffin and AOL co-founder Steve Case’s investment firm Revolution.

AppHarvest has since enlisted television personality Martha Stewart as an investor and Webb said the company continues to attract international interest.

“We are thinking through how we can be helpful on the global stage,” said Webb, who addressed the UN Security Council on indoor ag in late 2019. “This initial tranche of capital is focused on building here in this region, but we are certainly talking to other parties about any possibility of any joint venture or relationship domestically or abroad that fits into our model.”

Former Impossible Foods chief operating and executive officer David Lee joined AppHarvest late last month. His role was described as including “establishing effective product development processes as AppHarvest works to build an iconic brand,” offering another suggestion of future plans.