African Agriculture Files IPO Filing with US SEC

African Agriculture Inc. (AAGR), a New York-based, Africa-focused company, has filed for an initial public offering (IPO) with the US Securities and Exchange Commission.

The primary objectives of the initial public offering, according to African Agriculture management, are to fund their 10,000 hectare phased planting expansion program at LFT Farm, which is expected to take place in 2022 with approximately 50 hectares planted daily. . .

The company said Spartan Capital Securities was the sole underwriter for the IPO, but did not disclose how much it expects to raise or an expected price range for its IPO.

African agriculture says it is on a mission to provide protein to the world through improved livestock feed through high nutrient content and production of fibrous alfalfa, responsible management of environment and employment from Africa’s abundant coastline and rolling out cash flow in a global carbon offset program.

With capital in a very solid asset provided by founder and majority investor, Frank Timis, the company’s wholly-owned subsidiary, Les Fermes de la Teranga (LFT), is developing a commercial agricultural enterprise in northern Senegal that will focus initially on the production and sale of alfalfa for livestock feed and nutritional purposes. Over the next two to three years, the company plans to largely develop 62,000 acres of land located at LFT and also aims to expand into Senegal, Niger and potentially other East African countries. West.

“Protein is a necessary component of any diet. It is necessary for children to develop their brains and for bone development. So we want to make sure there’s a balance of protein in all aspects of serving the world, which will be nearly 10 billion people by mid-century,” said Alan Kessler, president and CEO. General of African Agriculture, in an interview last October.

“Thus, we will produce alfalfa as the first crop in African agriculture. Alfalfa provides protein to livestock and cattle needed for beef production and dairy production, which will fuel the manufacture of other products. In addition, it can be used as a biofuel. So we think we can really promote access to protein both domestically and potentially for the export of what we produce. Our next strategy also involves fish production. This will help deliver protein directly to local communities and also potentially for export,” said Kessler, a former investment banker and investment researcher with extensive experience investing in emerging markets.

African Agriculture management said it intends to use approximately $9,500,000 of the net proceeds of the IPO, along with its existing cash and cash equivalents, to prepare the pivots, l irrigation, all agricultural operations, machinery and infrastructure necessary to carry out this expansion, which, based on average yield forecasts, would produce around 250,000 tons per year.

“We currently intend to use approximately $18,000,000 of the net proceeds of this offering for plant protection products, including soil treatment, potassium, gypsum, seeds, fertilizers, payment of wages and staff for two years, and D&O insurance, Crop and Workers Compensation for two years. years,” management said.

“In addition, we currently intend to use approximately $650,000 of the net proceeds of the offering to conduct feasibility studies for potential new ventures, including approximately $50,000 for aquaculture, $300,000 for carbon credit and reforestation programs and $300,000 for algae-based biofuel.

“We intend to use the remaining proceeds for ongoing operating expenses and other general business uses.”

Also read: Nigeria’s agricultural investment slows amid worsening insecurity

The outlook for alfalfa is positive, according to a 2021 market research report from Fortune Business Insights, which values ​​the global alfalfa market at around $19.9 billion in 2020, with a projection to reach $35.2 billion. billion by 2028 through increased beef production. and the use of more nutritionally balanced food products.

Demand for food and protein sources will continue to rise with the projected increase in the world’s population to around 9.7 billion by 2050. Already, the ongoing conflict between Russia and Ukraine is putting pressure on food supply. Dana Peterson, in an op-ed for CNN Business Perspectives published April 9, 2022, highlights how sanctions, import bans, destruction of infrastructure, a shelter crisis and supply chain disruptions due to the Russian conflict -Ukrainian feed global food prices. and the risk of shortages, potentially paving the way for greater food insecurity around the world.

“The war in Ukraine is seriously disrupting grain production and exports to vulnerable countries. Not only does this make farming in Ukraine more difficult, but the sanctions disrupt the logistics of producing things like fertilizer,” Peterson writes.

Russia and Ukraine together provide a large share of the world’s cereals – almost a third of its wheat, a quarter of its barley – and nearly three-quarters of its sunflower oil, according to the International Institute for Research on food policies. In addition to being used in the production of breakfast cereals, breads, pastas and corn syrup, grains also provide animal feed. The disruption in the supply of these grains will continue to drive up the prices of proteins, such as chicken or pork.

With its investment in alfalfa production beginning in Senegal, with expansion planned into other high-margin food categories in the West African region, African agriculture is seen as well placed to contribute a significant contribution to global food and protein security while providing value for its shareholders.

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