Pre-IPO pedia | Booming expansion of Lineage Logistics through the acquisition of 72 companies

The COVID-19 pandemic has upended food supply chains and accelerated demand for online sourcing, from which investors notice the huge potential of the global cold chain market.

The global cold chain market grows from $212.24 billion in 2020 to $239.67 billion in 2021, at a CAGR of 12.93%.

Since the U.S. cold chain warehousing industry is well developed with a mature cold storage system in place, a positive cycle of scale effects has been formed.

The two leading cold chain warehousing companies, Lineage Logistics and Americold, have a combined market share of over 45%.

Since its inception, Lineage has been expanding rapidly, trying to seize a higher share in a highly fragmented global market by swallowing up smaller companies.

As of today, the logistics network of Lineage has been spread across 19 countries in North America, Europe and the Asia Pacific region.

How does Lineage manage to make its way through the cold chain industry and realize its ambition to reach the global market?

IPO Buzz will take you to the story of Lineage Logistics.

In 2008, former Morgan Stanley investors Kevin Marchetti and Adam Forste were keenly observing the dynamics of various industries in an attempt to build a long-term investable platform.

At that time, the national consumption level in the U.S. showed an upward trend and the consumer structure was transforming.

People preferred to have a healthier diet and there was a steady increase in demand for fresh fruit, vegetables and frozen foods.

At the same time, the U.S. road network was almost nationwide, allowing cold chain logistics companies to provide more efficient services.

The dramatic increase in demand for cold chain logistics and the improvement of logistics infrastructure propel the logistics and warehousing industry into a period of rapid growth.

The two founders, Kevin and Adam, noticed the huge growth potential of the logistics industry and then purchased their first temperature-controlled warehouse in Seattle.

In December 2008, the two founders and their team acquired Seafreeze and set up Bay Grove Capital, their first deal in the warehousing and logistics sector.

After a series of acquisitions, Lineage Logistics was officially launched in 2012.

By 2014, the majority of Lineage's clients were food manufacturers with cold chain storage and transportation needs.

To meet their needs, Lineage continued to expand its business by acquiring companies in related industries.

In March 2014, the company acquired Millard Refrigerated Services for approximately $1 billion, which made Lineage the global second largest temperature-controlled warehousing and logistics company after Americold.

At the same time, the managers of Lineage were aware that technological innovation is a key factor in building the company's core competencies.

Consequently, between 2016 and 2018, the company continued to develop its technology and was awarded 15 U.S. patents.

In 2017, Lineage took its first steps abroad, entering the European market with the acquisition of Partner Logistics, a major cold chain storage provider.

In 2019, Lineage entered the temperature-controlled logistics market in Australia, New Zealand and Sri Lanka with the acquisition of Emergent Cold.

In the same year, Lineage was awarded by Fast Company as one of the 50 most innovative companies globally and entered the Change the World chart of Fortune in 2020.

Lineage Logistics is a global warehousing, logistics management and real estate investment trust (REIT) with 17,000 employees worldwide and provides logistics support to more than 5,000 clients.

According to Lineage, its business contains three main parts, that is the storage, processing and transportation of goods around the world.

In terms of storage, the core strength of Lineage lies in its sophisticated network of refrigerated facilities.

By operating a number of strategically located cold storage facilities and providing services such as automated warehousing, Lineage is committed to ensuring the integrity of its clients' products and promoting food safety, simplifying the import and export process.

As for processing, Lineage offers services to handle and package products for clients, including optimizing supply chains through 'redistribution', on-site processing of products and more.

On the transportation side, Lineage optimizes the transport process of their clients' products by making effective use of the data it has.

This includes freight consolidation, on-demand transport and multimodal transport services to reduce the cost of transporting products and increase the efficiency of transporting products.

Since its inception, Lineage has completed six rounds of funding for a total of $8.7 billion. Major investors include Morgan Stanley, Stonepeak Infrastructure Partners, Rabobank,True Capital Management, D1 Capital Partners and others.

In September 2020, Lineage received $1.6 billion in funding, which made it probably valued at 15.5 billion according to Bloomberg.

In March 2021, Lineage completed a private equity round for $1.9 billion, which valued it at $18 billion, with seven investors including real estate investor BentallGreenOak, D1 Capital Partners and Oxford Properties Group.

In January 2022, Lineage received another $1.7 billion investment from 11 investors at an undisclosed valuation.

Lineage is not yet listed, therefore no details of its financials are available.

Statista has previously disclosed in 2021 that Lineage's financials for the period 2015-2020 saw its net revenue grow from $0.8 billion in 2015 to $1.44 billion in 2020.

In 2020, Bloomberg said that Lineage was expected to become the third-largest enterprise value industrial REIT in the U.S. if it went public.

In March 2021, Greg Lehmkuhl, the CEO of Lineage replied in an interview that the company has no immediate plans to go public, but they would make preparations if they needed to in the future, including complying with regulatory requirements, etc.

Mooers, have you heard about Lineage Logistics? What do you think about its IPO prospects? Feel free to comment below.