Companies that are headed to an initial public offering (IPO) in this day and age are often tech start-ups that are just a few years old. With the Dole IPO, you have not one but two companies that date back to the 1850s, and what they sell doesn't need to be charged or connected to the internet. But this IPO is about more than pineapples and bananas (Dole's two top products) -- it's also a real estate story. The company owns 109,000 acres of land all around the world.
Two brands and nearly two centuries
This isn't Dole's first time as a publicly traded company. It was taken private in 2013. The new Dole IPO is actually also the formal launch of two companies that have been gradually coming together since 2018. In 2018, Total Produce took 45% of Dole. Together, the two companies, which both began in some way during the 1850s, will become the global leader in produce.
The new Dole company will be priced at between $20 to $23 a share, giving it a valuation of around $2.1 billion. It plans to sell 26 million shares. Dole reported pro forma assets of $4.7 billion at the end of 2020. That includes the value of its land, as well as owning and leasing around 250 facilities globally, including packing houses, cold storage facilities, and distribution and manufacturing facilities.
For the fiscal year 2020, Dole reported pro forma revenue of $9 billion and a pro forma operating income of $208 million. While Dole is a global leader in bananas, pineapples, and bagged salads, it's also expanding its presence in categories such as organic produce, avocados, and berries.
In its F-1, Dole outlined its commitment to ESG practices. Dole Food Co. and Total Produce have set goals for reducing emissions and achieving 100% optimized water practices in managed farms and packing facilities. The two companies are also focused on compostable packaging, reducing shipping emissions, and contributing to local social impact platforms. They are also using SEDEX, a platform that allows companies to track and improve labor conditions.
Proceeds from the IPO will be used to pay off some of the company's $1.9 billion in debt. The company plans to expand into new categories and strengthen the Dole brand in Europe.
Investing in farming
Of course, Dole isn't the only option for those interested in investing in farmland. There are several farmland REITs (real estate investment trusts), such as Gladstone Land (NASDAQ: LAND), which is actively acquiring farmland around the United States, and Farmland Partners (NYSE: FPI), which manages over 160,000 acres around the country with commodity crops such as corn, wheat, and cotton currently making up the majority of their portfolio. There are also multiple farming crowdfunding sites, such as AcreTrader and Farm Together, which offer shares in individual farms.
Several other farming companies have also gone public within the past year. In October 2020, Mission Produce (NASDAQ: AVO), the leader in avocado production, debuted on the Nasdaq and has performed well in a short period of time, with share prices up almost 40% since its debut. Mission's revenue for 2020 was $0.9 billion, making it far smaller than Dole.
AppHarvest (NASDAQ: APPH), a company that specializes in technology-driven indoor farming went public via SPAC in early 2021, but so far its share prices are down by almost 65% since the completion of the merger. AeroFarms, a rapidly growing vertical farming company, is going public via SPAC, and is creating the world's largest indoor farming research facility in Dubai.
The Millionacres bottom line
Investing in agriculture makes sense for the long term. The need for a stable food supply is only increasing, and the consolidation of farms that continues to take place both nationally and globally should be good news for many investors.