Benson Hill Inc. becomes public through merger with Star Peak Corp II (NYSE: STPC)
Stimulating crop innovation to improve food by unlocking plant genetic diversity
$ 140 billion in the short term TAM opportunity in the vegetable-based meat segment
Benson Hill’s revenue in 2020 was $ 102 million, and will grow by almost 50% in the coming years.
Ebitda is expected to grow to $ 96 million in 2025 and to grow to $ 556 million in 2027.
CEO Matt Crisp is a serial entrepreneur at AgriFood and a former life sciences venture capital partner.
Chairman of the Board of Star Peak Corp. II Mike Morgan is also the CEO of Triangle Peak Partners LP, an asset management company.
Google Ventures invested in Benson Hill in 2018 and 2020.
Also sponsored by the Prelude Fund, run by the son of billionaire investor Jim Simons, Nat Simons.
The two main lines of business are Ingredients and Fresh, clients are Nestlé SA, Bunge, Kroger, Publix.
Benson Hill can offer a cheaper source of soy protein because less processing is required than with commercial soybeans.
Trade with less than 5x sales in 2023, which is much cheaper than Beyond Meat, AppHarvest, Berkeley Lights, Inc.
President Biden has set a goal to halve U.S. greenhouse gas pollution by 2030. But in order to decarbonize the economy, it is necessary to decarbonize agriculture. To feed the world and fight climate change, sustainable plant growing methods are needed.
Enter Benson Hill Inc., which develops ESG, an agricultural technology platform to go public through the merger with Star Peak Corp II (NYSE: STPC) in a deal valuing the company at $ 2 billion. According to the Barclays Global Food Report (until 2029), in the near future it will be possible to get $ 140 billion in the segment of vegetable meat.
Plant-based meat continues to grow in grocery stores and restaurants as consumers become more addicted to it. St. Louis-based Benson Hill uses machine learning, modeling and genetics to optimize plant growth. The nine-year-old company develops crops such as soybeans and yellow peas that ripen faster, have a higher protein content or taste better, saving growers time and resources.
Private investors are already in business. Benson Hill has raised $ 150 million from the Wheatsheaf Group and Google Ventures, the venture capital arm of Alphabet Inc., along with other agricultural sponsors including Louis Dreyfus Co.
Investors including funds managed by BlackRock Inc., Van Eck Associates Corp., Hedosophia and Lazard Asset Management are investing in the deal through a $ 225 million private equity investment, or PIPE (which has been bumped up from $ 175 million) … These funds and the money held by SPAC are expected to generate approximately $ 625 million in cash income – enough to fund many years of growth.
Benson Hill has established key relationships in both its product segments – ingredients and fresh produce. Its ingredient partners are Nestlé SA, General Mills, Inc., Blue Buffalo and Bunge Ltd., and its fresh food partners include Kroger Co, Publix, SYSCO Corp. and US Foods Holding Corp.
In the ingredients segment, the focus is on soybeans and yellow peas, including the production of ultra-high protein soybeans. The company is then working on yellow peas, the fastest growing plant-based protein source, for which Benson Hill has a two to three year lead. The company also plans to expand its focus on manufacturing partnerships that will provide ultra-high licensing margins and royalty revenue.
Unlike many of SPAC’s goals, Benson Hill already has a solid financial footing. In 2020, the company had revenues of $ 102 million, and between 2020 and 2027, it predicts 46% year-on-year sales growth. That’s higher than stock market darlings like Beyond Meat Inc. by about 40%. Benson Hill’s gross margin of 45% is also higher than its peer group, ranging from 20% to 35%.
It should be noted that companies such as Beyond Meat and Impossible Foods could be ideal clients for Benson Hill. As a result, it is cheaper to use Benson Hill soybeans because it already contains protein and is rich in flavor, which eliminates the need for further expensive processing used to produce plant-based meat.
Benson Hill also boasts extensive management experience with extensive industry and SPAC experience. CEO Matt Crisp is a serial entrepreneur at AgriFood and a former life sciences venture capital partner. Star Peak II is the second company to receive the backing of Mike Morgan, former CEO of energy infrastructure company Kinder Morgan Inc., and investors in hedge fund Magnetar Capital. The Star Peak SPAC team’s first project recently publicized clean energy storage company Stem Inc. and it performed much better than most SPACs – trading at $ 28 versus $ 10 at the IPO price.
The company’s secret weapon is its platform called CropOS, which brings together data, plants, and food science to create more affordable and delicious food. CropOS uses predictive analytics to simulate tens of millions of plant genetic outcomes and can shorten the traditional crop breeding process by years, getting products to market faster and lowering costs for food and ingredient companies.
ESG thematic ETFs, a growing sector for investors who want companies to share similar views, could play an important role in Benson Hill’s investments. In addition, many institutional investors are not allowed to buy SPAC and have to wait for the company to go public.
Best of all, the stock looks very profitable. The current price implies that the value of the enterprise is less than 5 times the profit of 2023. Meanwhile, Beyond Meat is trading 8x, Biotech Berkeley Lights 15x, and AppHarvest 11x. Sentieo, a research platform powered by artificial intelligence.
Investors can also take comfort in loss protection. The shares are trading at $ 9.88 per share, which is a few cents less than the approximately $ 10 cash in trust. This ensures that investors are not at risk if they decide to buy back their shares for cash prior to closing the deal.
With Benson Hill, investors can get involved in the early days of the plant revolution. All they have to do is tune in.
Contact person for IPO Edge:
Jarrett Banks, Editor-in-Chief