Matt’s Top 3 SPAC Targets – Sustainability


Matt’s Top 3 SPAC Targets – Sustainability

SPAC Insider contributor Matt Cianci this week compiled his three favorite SPAC targets in the sustainability sphere. We look at why they are compelling and why each could be a fit for a blank-check merger.


Just as energy efficiency is an unheralded part of reducing emissions, so too is shipping efficiency. The Environment Protection Agency (EPA) estimated that commercial trucking accounted for 7% of all US greenhouse gas emissions to the tune of 436.5 metric tons of CO2 equivalent. About 76 million metric tons of this (17%) came from trucks running empty between destinations.

Founded in 2015, Convoy provides a machine-learning automated freight network specifically designed to optimize loads and reduce the number of empty trucks on the road. It estimates about 35% of the miles driven by heavy duty trucks are currently run empty.

Convoy pic
Courtesy of Convoy

The Seattle-based company is also the right size for a SPAC combination having achieved a valuation of $2.75 billion in its November 2019 Series D round. This raised $400 million and was led by Generation Investment Management and T. Rowe Price. Its investor base also includes Amazon Founder Jeff Bezos and CEO Marc Benioff.

Freight tech has already been a popular landing spot for private capital, with startups like Flexport raising over $1 billion in outside funding. But, a player focused on sustainability would be a novel addition to the public markets.

Convoy has plenty of white space to expand into within the fragmented US logistics sector, and the company also notes that about three-quarters of S&P 500 companies have set benchmarks for their own carbon reduction and it is well-positioned to serve those needs.

Three listed SPACs have named sustainability as their area of focus as they search for combination partners. This trio – Northern Genesis, Sustainable Opportunities and Tortoise Acquisition II – each have about $300 million in trust and so would likely need PIPE investor support to strike a deal with Convoy.

RWDC Industries

The sizzling success of Beyond Meat and Impossible Burger have demonstrated that US consumers are willing to pay the extra for sustainability in their food. But what about the package it comes in?

RWDC Industries has developed an alternative to petroleum-derived, single-use plastics called Solon, which is produced via a natural fermentation process and completely biodegrades in weeks without toxic residue.RWDC pic

The company has thus far used Solon to manufacture straws, coffee lids, plastic bags, utensils, and food containers.

RWDC has raised $168 million to date, most recently reeling in $133 million in a May Series B, so the company might not be hurting for immediate capital. However, a SPAC’s management team could potentially provide the missing link between RWDC’s technology and a major order from a fast food chain or consumer packaged goods (CPG) maker. That could be all the company needs to skyrocket as a pure-play stock for that would touch on both better-for-you eating and the packaging market as a whole.

To that end, potential fits could include some of the newcomer SPACs that have filed but have yet to list. Last week, the wordy Climate Change Crisis Real Impact Acquisition Corp. filed for a $200 million IPO, which could prove to be the right trust-size fit for a RWDC deal. Meanwhile, PMV Consumer Acquisition Corp. aims to raise $175 million in its IPO and target consumer combination targets. It is to be led by Chairman and CEO P. Jasper Jakobsen who previously served as CEO of Mead Johnson Nutrition.

Pivot Bio

We’ve mentioned how trucking contributes to 7% of US emissions. That same EPA study found that agriculture is responsible for about 10% of the share with synthetic nitrogen fertilizers being a major culprit. One percent of the world’s total energy use goes towards making synthetic fertilizers and the runoff from these chemicals has created about 500 ocean dead zones, according to Pivot Bio.

Pivot Bio uses a fertilizing process that uses microbes to help crops capture natural nitrogen from the atmosphere, significantly reducing the reliance on synthetic fertilizer. The Berkeley, California-based company is in its second year of commercializing this product and is currently expanding from the US into the Argentinian market.

Pivot Bio pic

It is making this Southern Hemisphere expansion backed by the proceeds of a $100 million Series C in April, which was led by Breakthrough Energy Ventures and Temasek Holdings. It achieved a valuation of between $500 million and $1 billion in this funding round, according to PrivCo. The company also counts the venture arms of agritech giants Bunge and Monsanto among its investors.

The US market for nitrogenous fertilizer is expected to expand from about $113.7 billion in 2018 to over $140 billion in 2026, according to a study by Fortune Business Insights.

Pivot Bio’s Argentina exposure could put it on the radar of South America-focused SPACs in addition to the three listed SPACs and four that have recently filed with an interest in sustainability and climate change mitigation.