Novi, Michigan, US: Lineage Logistics has raised $4.45bn in biggest IPO in 2024. What’s behind the success. Lineage, the world’s biggest cold-storage operator by capacity, when it listed its stock on the Nasdaq exchange this past week, was the largest initial public offering in the US so far this year. At $78 a share, the IPO raised $4.4bn and valued Lineage at more than $18bn.
It’s an undoubted succes story for a relatively new entrant founded in 2008 by two former Morgan Stanley investment bankers, Adam Forste and Kevin Marchetti. Since then, the duo has amassed an empire that today operates nearly a third of the temperature-controlled warehouse space in the US.
Cold storage was not completely foreign to them. Marchetti worked at the investment firm Yucaipa when it made an investment in cold-storage giant Americold Realty Trust. Lineage overtook Americold to become the biggest cold-storage operator in 2019. Americold, its next-biggest rival, runs about 1.3 billion cubic feet in North America and about 204 million cubic feet elsewhere.
Americold was founded in 1903, a reminder that cold storage is an old industry although it has grown massively in the past few years. Lineage expanded with a steady stream of acquisitions. Over the past 16 years, it has grown to become a giant in a sector dominated by family-owned companies. The largest cold-storage operator in the world by space managed, it has made 116 acquisitions since 2008.
“When you look at this industry, it’s pretty old-school, meat and potatoes,” said Marchetti. The owners of the facilities Lineage courts “know every employee’s name.” Forste and Marchetti wanted to keep that part of the culture, but recognised that running temperature-controlled warehouses was “not the most sophisticated industry,” said Forste. By 2013, they decided they needed to integrate more technology into the business.
Forste and Marchetti funded their acquisition spree by raising money from investors, borrowing money from banks and tapping their personal savings for early warehouse purchases. Forste and Marchetti quickly saw how data and technology could make the logistics of moving perishable items around the world more efficient. Many trucks were transporting half-filled trailers, for example, so Lineage started coordinating shipments from different customers to cut costs and increase efficiency.
Lineage uses automation to reduce reliance on manual labor, something that not only helps speed up the process and reduces human error but also provides predictability, given the high turnover rate of such a physically demanding job.
The cold-storage giants also compete with smaller, privately owned businesses and even face competition from some of their own customers.
“The way our modern food system works is based on refrigeration,” said Shane Brennan, spokesman for the Global Cold Chain Alliance, an industry group. Cold storage, he said, is “the reason you can have tomatoes in the winter.”
The specialty warehouses also enabled the growth of the pharmaceutical industry in the US, which largely operates separate facilities storing drugs and vaccines. The importance of cold storage was highlighted during the effort to distribute Covid-19 vaccines as drugmakers rushed to get shots that required storage at ultra cold temperatures.
The pandemic also changed the way Americans eat. Consumers over the past four years have switched to eating more meals at home as they work remotely more often and cope with rising food costs. Shoppers are buying more groceries online for pickup and delivery, ordering ready-made meal kits and eating more frozen food. Frozen-food sales rose to $74 billion in 2023, up 7.9% from a year earlier and roughly 33% above 2019, according to data from the American Frozen Food Institute.
At the same time, companies have outsourced more of their cold-chain processes to big operators such as Lineage and Americold, which run sprawling facilities that can handle dozens of customers under one roof. More developers have entered the industry amid growing demand. Real-estate investor Related Fund Management in 2022 launched a $1 billion cold-storage business called RealCold. More than 18 million square feet of new temperature-controlled space has been built across the U.S. since 2019, according to commercial real-estate services firm JLL.
