News / Lineage aiming to raise over $3bn from IPO as investor roadshow begins

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US-headquartered cold chain storage and logistics operator Lineage today announced that it had launched the roadshow for its forthcoming initial public offering (IPO) on the Nasdaq stock exchange.

The company said it would sell 47m common stocks, priced in the range of $70-$82 per share, implying that Lineage is hoping to raise between $3.29bn and $3.85bn through the sale.

A further 7.05m shares will be available to Lineage’s IPO underwriters under a 30-day purchase option.

In an article that broke the news this morning, forcing Lineage to make an official announcement, Bloomberg estimated that the sale would “give the real estate investment trust a market value of about $19.2bn”.

It added that Lineage’s current owner, private equity fund Bay Grove Capital, would continue to hold the majority voting rights after the IPO.

The date for the IPO has yet to be set, as has Nasdaq’s approval for the listing, but Lineage said it expected to win approval and that its stock would be traded under the LINE ticker symbol.

It added that proceeds from the IPO would largely be used to reduce its debt.

“The company intends to use the net proceeds received from the offering to repay borrowings outstanding under its delayed draw term loan, repay borrowings outstanding under its revolving credit facility, fund one-time cash grants to certain of its employees, in connection with this offering and estimated cash withholdings associated with stock grants, and redeem its Series A preferred stock.

“Following such uses, the company expects to use the remaining net proceeds for general corporate purposes, which may include the repayment of additional borrowings outstanding under its revolving credit facility,” it said.

It will join fellow US cold storage operator Americold on the Nasdaq, both companies structured as Real Estate Investment Trusts. However, Lineage is expected to rather dwarf Americold, which has a market cap of $7.7bn, according to S&P’s CapitalIQ.

In terms of property portfolio, it is around double the size of Americold and with a wider geographic spread – boasting 482 warehouses worldwide amounting to 85m cu metres, compared with 244 warehouses and 31m cu metres.

Lineage has also been far more active in using M&A to expand its network, which has hitherto largely been financed by large-scale funding rounds with institutional investors. Since March 2020, Loadstar Premium estimated, it has raised around $6bn and lately it has begun to attract some of North America’s largest pension funds.

“The arrival of a series of pension funds into Lineage’s investor portfolio indicates, Premium believes, a change in the way the company – and perhaps the food logistics sector as a whole – is viewed by the investment community, exploiting a ‘strength for longer’ attitude in the supply chain and the yield, or just mere capital gains, that may come from investing through the pandemic cycle,” Premium wrote in 2022.

“A partial float where Lineage aims to sell a 25% stake, for instance, would give the long-term investors a trader-like profit in a flash,” it added.

Its most recent acquisition was announced on 5 July, the purchase of Italian operator Eurofrigor, which operates a 24,000 sq metre facility in Controguerra, on the central east coast of Italy, and offers storage, tunnel freezing and comprehensive customs/VAT handling, among other value-added services, mostly for fish, protein and vegetable commodities.