Agrisoma Biosciences taps advisor for capital raise, CEO says

Provided exclusively by Mergermarket, an Acuris Company

Agrisoma Biosciences is close to completing a CAD 35m (USD 28m) Series C capital raise alongside AltaCorp Capital, said Steven Fabijanski, CEO.

Norton Rose is legal counsel for the company, he said. He added that several of Agrisoma’s existing investors will participate in the round, declining to elaborate.

According to news reports, the Gatineau, Quebec-based company raised USD 15.4m via a Series B round in April, and USD 8m in a Series A round in 2014, both involving Cycle Capital Management and BDC Venture Capital. In April 2015, the company’s management acquired a 22% stake in the business.

Agrisoma created the oilseed variety brassica carinata. The oilseed provides biofuel needs for the aviation industry and non-edible oil for low-carbon biofuels and animal feed protein.

“We just started on our hockey stick of revenue. Larger and larger acres are coming on board for the crop,” said Fabijanski, who declined to disclose the revenue.

The company is raising both debt and equity because its crop requires a lot of working capital, he added.

Agrisoma is already receiving acquisition interest, both from strategics and financial investors, said Fabijanski. Its eventual exit strategy is to be taken out by a large agricultural player such as Archer-Daniels Midland [NYSE:ADM] or Cargill or a seed company such as Monsanto [NYSE:MON] or DuPont [NYSE:DD], he said. An IPO is another possibility, he added, with timing depending on market conditions.

He maintained, however, that Agrisoma has the potential to be profitable continuing as a standalone entity, adding that it expects profitability within two years or less.

The company has been generating revenue for several years. It started out in 2001 as a gene mapping company. Fabijanski, who had a background in the canola industry, joined as CEO in 2007 and the company decided to apply the gene mapping technology to oilseed crops, particularly for biofuels. Brassica carinata is similar to canola but it contains more industrial oil than food oil. The oil easily converts to diesel and jet fuel and can grow where food crops can’t, such as regions with harsh frosts.

Since 2012, the company has converted the grain into diesel and bio jet fuel. “That’s when we started to really take off – pardon the pun,” said the CEO.

Agrisoma worked with the Canadian Aerospace Institute to enable the first 100% bio jet flight in late 2012. The aircraft flew without petroleum fuel, allowing for better fuel economy and lower emissions. Soon after, Agrisoma started growing the crop commercially in Canada. Since 2014, it has been selling its seed to farmers in the Southeast US because carinata can be grown there in winter, on the same fields used for agricultural crops in the warmer months.

“It’s a true Canadian crop – it loves Florida in winter,” Fabijanski quipped. The company, in turn, purchases the grain from the farmers to produce biofuel. At the same time, carinata enriches the soil for the farmers’ food crops.

Agrisoma’s technology is “very disruptive” and has the ability to double agricultural productivity, said the CEO. The seeds have been used in crop rotation programs with soy, peanuts, corn, wheat, barley and cotton. The company’s goal is to recruit enough growers to cover 15,000 to 25,000 acres in the Southeast US in 2017.

Fabijanski views the Southeast US as a proxy for South America and is looking to expand in that region. Farmers in South America are looking for a winter crop to protect the soil from erosion. This month, the company announced a long-term supply agreement with Helsinki biorefinery giant UPM – The Biofore Company, under which the two companies will grow carinata oilseed crops with third-party farmers in Uruguay and Brazil. UPM was producing biofuel from forestry waste in Finland and was looking for new raw materials, he said.

In the near term, Agrisoma’s goal is to grow its production volumes, find more partnerships in the biofuel industry and expand further into Europe, where there is a need for additional protein for dairy and meat production as well as biofuels. “We have a series of partners we’ll announce in the coming months,” he said.

Agrisoma is only now beginning to talk about its commercial impact on the agricultural community, the CEO said. Carinata produced under these “second cropping” procedures provides finished fuels with a greenhouse gas reduction of more than 75% over fossil fuels. Agrisoma believes that on a broader scale, reductions of more than 100% are possible, providing for “carbon negative” fuels that are price competitive with fossil fuels.

by Marlene Givant Star

As seen in the mergermarket, an Acuris company, newsletter on 27/07/2017

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