Strong lift off for seaweed firm with unique business
An Australian company working to limit the livestock industry’s impact on climate change has won a warm welcome as investors feasted on the bottom of the stock market’s latest open.
Shares in Sea Forest, an Australian animal feed additive maker that uses seaweed to reduce methane emissions, traded 20 per cent above its offer price after listing on the Australian Securities Exchange on Wednesday.
The organization’s SeaFeed supplement, made from native Tasmanian seaweed asparagus, has been shown to reduce methane released from farm animal burps by up to 80 percent.
Recent research has also discovered benefits in the medium; found that the additive also helped livestock grow faster.
The initial public offering was oversubscribed, raising $20.5 million and valuing the company at $112.1 million at an offering price of $2 per share.
The company’s market value rose to roughly $135 million at $2.42 per share Wednesday afternoon as pent-up demand recovered from persistent selling.
Founder and chief executive Sam Elsom said the IPO would fund Sea Forest’s path to profitability after years of costly research investments, after securing a distribution deal in Europe and partnerships with Belterra and Oisix to launch the product in Brazil and Japan.
“Being listed on the ASX gives us a platform to scale production, expand internationally and support farmers across Australia, and over time reduce methane emissions by up to 80 per cent internationally,” Mr Elsom told investors at the stock exchange in Sydney.
“As we move into life as a public company, our commitment is simple: We will move forward with transparency, discipline and the same purpose that got us here.”
Proceeds from the offering will include funding blending and distribution facilities in Queensland, NSW, Western Australia and South Africa, as well as clearing foreign regulatory hurdles.
Sea Forest already has supply agreements with livestock producers and global brands including Teys Australia, Ashgrove Cheese, Uniqlo parent Fast Retailing, Grill’d, Orffa, Olsson’s, Chadwick Consolidated Group and Morrisons UK.
Beef and dairy cattle are the largest source of methane in livestock, with a warming capacity 80 times greater than carbon dioxide.
While seaweed feed additives have so far been excluded from the Australian government’s carbon credit program, other jurisdictions are implementing measures such as methane credits or sustainability subsidies for farmers.
Voluntary frameworks like Verra allow manufacturers to generate carbon credits from anywhere in the world.
Mr. Elsom said Sea Forest offers one of the few tools that truly delivers return on investment when it comes to global decarbonization efforts.
“These often come at an extraordinary cost to the economy,” he said.
“I’m not saying these things are less important, I just want to say that the work we’re doing is in many ways counterproductive.”
John McKillop, the organisation’s independent chairman and agribusiness leader, said the product was a game-changer for livestock producers, even before environmental benefits were taken into account.
“When you look at something that delivers a 6 per cent improvement in net feed efficiency, there was a huge opportunity there that would not only improve outcomes for the planet, but would also improve outcomes for feedlot distributors and ultimately be passed on to other livestock producers,” he told AAP.
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