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Freightos Goes Public In SPAC

June 2, 2022

Freightos and Gesher, a special purpose acquisition company have entered into a definitive merger agreement that would result in Freightos being publicly listed on the NASDAQ under the ticker symbol FROS. The combined entity, to be known as Freightos, with offices around the world, will have a pro forma enterprise value of approximately $435 million.

Freightos connects participants across the international freight ecosystem, including hundreds of airlines, ocean liners, and trucking companies, as well as thousands of freight forwarders and over ten thousand importers and exporters, through a transparent digital platform that allows real-time global freight rate comparison, booking, and shipment management. The capital raised from the transaction will be invested to further scale the business, driving transaction value and improving margins.

Freightos was inspired by the successful digital revolutions in passenger travel, retail, lodging, and other industries, aiming to bring similar efficiency and transparency to the massive but largely undigitalized international freight industry.

“Global freight moves the world,” said Zvi Schreiber, Chief Executive Officer of the Freightos Group. “Last year, $22 trillion worth of goods crossed borders, but we have all witnessed what happens when shipping doesn’t run smoothly, creating inventory shortages and increasing prices that challenge businesses and consumers globally. This presents a massive opportunity to digitalize one of the last large offline industries.”

“Our combination with Gesher and access to public markets will allow Freightos to continue to aggressively scale our platform and lead as an international freight booking and payment tool of choice,” said Schreiber. “This day represents new opportunities for the Freightos team around the world, whose diligence and dedication has made Freightos what it is today.”

“Freightos is modernizing the global shipping industry as a true innovator in the logistics space,” added Ezra Gardner, Gesher’s Chief Executive Officer. “It enjoys positive unit economics, high gross margins, an incredibly high growth rate, and impressive customer retention. It is distinguished by its proprietary technology, data analytics, and deep network of customers comprising some of the largest players in the global supply chain today. Following the combination, Freightos will be the only pure-play public global freight platform investment opportunity available, and we’re excited to partner with Zvi and his team on this enormous market opportunity.”

In addition to the proposed merger with Gesher, the combined entity has obtained $80 million in capital commitments. Leading global investment firms and strategic industry players that have made commitments include:

Qatar Airways, the world’s largest air cargo carrier, has agreed to invest another $10 million in the combined company.

M&G Investments (£370 billion of assets under management) made a $60 million commitment to the Company, consisting of 4 million units of Gesher at $10.00 a share, waiving redemption rights with respect to approximately one million shares, as well as providing an additional backstop commitment of up to $10 million.

Composite Analysis Group, Inc., an affiliate of Safer Logistics, LLC, committed up to $10 million to backstop redemptions by shareholders of Gesher.

Existing shareholders in Freightos include FedEx Corporation, SGX Group (the Singapore Exchange Limited), a number of major airlines, including Qatar Airways, IAG Cargo, the cargo division of International Airlines Group (a leading airline group whose brands include British Airways and Iberia), LATAM Airlines Group, Bob Mylod (Chairman of Booking Holdings) and leading financial investors such as Aleph and MoreVC. As an expression of confidence in Freightos and long term commitment, the team and large existing and new Freightos shareholders have signed lockup agreements spanning two years.

“Freightos is addressing an area of overwhelmingly unmet need in the global economy; fixing global freight. With its marketplace technology winning rapid commercial adoption, it is an ideal target for Gesher,” stated Carl Vine, Portfolio Manager at M&G. “The recent growth trajectory suggests that the company is well on its way to cementing its dominant position in this opportunity-rich area. We’re confident that this business combination will help Freightos realize its immense potential.”

Proven Leader in Global Freight Booking

Freightos has become a leading global freight booking and payment platform, modernizing an industry stymied by intermediation, offline communications and inefficient pricing. Through it’s two core platforms – Freightos.com and WebCargo, Freightos facilitates the shift from manual pricing and spreadsheets to a seamlessly integrated digital platform enabling users to compare available shipping routes, capacity on specific vessels or aircraft, receive accurate, binding and all-in prices, complete with carbon emissions from shipping options, and to book in real-time. This results in improved capacity utilization, reduced pricing, and significant reductions in manual labor. Freightos aims to bring the same efficiency and transparency that passenger travel enjoys to the world of global freight transportation.

In addition, Freightos is the calculating agent of freight shipping price indexes, like the daily 40’ container index, the Freightos Baltic Index (FBX) with futures traded on the CME (Chicago Mercantile Exchange), which are globally recognized as benchmark economic indicators. Futures contracts can allow companies to hedge shipping costs for upcoming periods by combining financial service tools with international shipping.

Freightos’ GBV transaction volume continues to grow at a fast and accelerating rate, closing a record Q1 2022 with 3.4 times as many bookings as a year earlier. Freightos sees its top priority as growing GBV. Secondarily the company is focused on monetizing its growing bookings while continuing to grow the already healthy gross margin and maintaining capital efficiency.

Key Transaction Terms

The business combination is projected to generate gross proceeds of at least $80 million (and up to $166 million depending on redemptions), which will be used to fund Freightos’ growth plan. The implied pro forma equity value of the combined company is expected to be at least approximately $500 million, with a pro forma enterprise value of approximately $435 million. Existing Freightos shareholders are expected to own up to 78% of the combined company after funding.

The Freightos management team will remain in place with Dr. Zvi Schreiber continuing to serve as Chief Executive Officer, overseeing the Company’s strategic growth and expansion efforts, and Mr. Ran Shalev remaining as Chief Financial Officer. The board of directors of the Company is expected to include Dr. Udo Lange, the Chief Executive Officer of FedEx Logistics, Mr. Guillaume Halleux, the Chief Cargo Officer of Qatar Airways (the world’s largest air cargo carrier), Mr. Bob Mylod, Chairman of Booking Holdings, industry veteran Ms. Inna Kuznetsova, and other leading tech investors, as well as Mr. Ezra Gardner, the Chief Executive Officer of Gesher. The newly expanded board of directors of the Company will have significant logistics experience, deep technology knowledge, public company and capital markets experience, and a diversity of viewpoints and skills to serve as good stewards of the Company. Strict internal screens are in place to avoid directors associated with logistics companies being exposed to any data relating to their competitors. The proposed transaction has been unanimously approved by the boards of directors of Gesher and Freightos. The transaction is expected to close in the second half of 2022, subject to customary closing conditions, including the approval of Gesher and Freightos shareholders and regulatory review.

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