RLF AgTech, a Perth-based startup recently debuted on the ASX following an $8.5M IPO, which the company said will enable it to expand its sales and marketing teams, increase productive capacity (plant and equipment) and progress its RLF Carbon Initiative.
Discovery Capital Partners was the lead manager, issuing 42.5M shares at $0.20 per share. The offer was opened on 18 February 2022 and closed on 3rd March 2022. The IPO was supported by by a number of Australian and overseas institutions and family offices. Based on the IPO listing price, the market capitalisation of the company is $37M.
RLF combines plant science with advanced chemistry and manufacturing processes to produce higher-quality plant nutrition products for commercial agriculture. The company’s Plant Proton Delivery Technology (PPD) enables farmers to grow higher-yielding, better quality, and more nutritious produce.
Strong growth trend
RLF reported strong growth in the 2021 financial year. The company achieved a revenue of $8.5M and maintained a strong gross profit margin of 68%.
RLF operates in a global crop nutrition market which was worth an estimated US$341.4B in 2020. The industry is predicted to continue seeing unprecedented growth thanks to rising consumer demand for sustainable food, the increase in global population, and the associated need for larger yields and higher-quality crops.
The company already has established sales in Australia, Canada, and China, and is in the early stages of the commercialisation process in India, Brazil and the USA. RLF estimates that the opportunity for the Company is worth over US$30B in Asia alone, comprised of a US$22B seed primer and foliar market and a US$8B fertigation market.
Russia-Ukraine conflict presents opportunity
Due to the ongoing conflict between Russia and Ukraine, the price of fertiliser is reaching an all time-high. As Russia is the world’s biggest fertiliser exporter and Ukraine holds deposits of key fertiliser ingredients, supply has been severely impacted due to trade sanctions on Russia and logistic constraints in Ukraine.
RLF said an enormous opportunity has been created to help farmers looking to reduce their usage of soil applied nitrogen, phosphorus, and potassium (NPK) fertiliser. The company said its PPD Technology can been used to reduce NPK fertiliser inputs by around 20% whilst maintaining and increasing yield.
“We are working diligently to support farmers in this challenging time of rising production costs by providing alternatives to soil applied fertilisers and increasing crop yields to maximise profits for farmers,” said Ken Hancock, RLF Managing Director.
Regulatory changes to carbon credits presents another opportunity
In addition to the growth opportunities currently presented, RLF is exploring commercial opportunities (through its subsidiary RLF Carbon) that seek to reduce greenhouse gas emissions across the agricultural supply chain.
The Federal Government has recently outlined changes to the way Australian Carbon Credit Units (ACCUs) can be sold on the open market. The company said the net result will be greater flexibility in allowing farmers to sell their ACCUs on the open spot market.
RLF Carbon has entered into a non-binding Letter of Intent with the Commonwealth Bank of Australia to explore opportunities to conduct a carbon feasibility study and other development work with respect to a potential strategic carbon relationship. The changing regulatory environment will be a key driver of going forward with this development.
“The carbon credits environment continues to be a dynamic place to operate and our RLF Carbon business is well situated to navigate the changing regulations and begin generating carbon credits,” said Mr Hancock.