An Australian company working to curb the livestock industry’s impact on climate change has won a warm reception as investors feasted at the trough of the stock exchange’s latest debut.
Shares in Sea Forest, an Australian livestock feed additive manufacturer using seaweed to cuts methane emissions, traded 20 per cent above its offer price after listing on the Australian Securities Exchange on Wednesday.
The organisation’s SeaFeed supplement, made from the native Tasmanian seaweed asparagopsis, has been shown to reduce methane released from livestock burps by up to 80 per cent.
Recent studies also discovered benefits at the feedlot, finding the additive also helped livestock grow faster.
The initial public offering was oversubscribed, raising $20.5 million and valued the company at $112.1 million at the $2 per share offer price.
At $2.42 per share by Wednesday afternoon as pent-up demand uncoiled in persistent sales, the company’s market capitalisation swelled to roughly $135 million.
After securing a European distribution deal and partnerships with Belterra and Oisix to launch the product in Brazil and Japan, the public offering will fund Sea Forest’s path to profitability after years of costly research investment, founder and managing director Sam Elsom said.
“Listing on the ASX gives us a platform to scale production, expand internationally and support farmers across Australia, and in time internationally to reduce methane emissions by up to 80 per cent,” Mr Elsom told investors at the stock exchange in Sydney.
“As we step into life as a public company, our commitment is simple: We will lead with transparency, with discipline and with the same purpose that brought us here.”
Proceeds from the offer will include funding blending and distribution facilities in Queensland, NSW, Western Australia and South Africa, as well as navigating foreign regulatory hurdles.
Sea Forest already has supply agreements with livestock producers and global brands including Teys Australia, Ashgrove Cheese, Uniqlo parent company Fast Retailing, Grill’d, Orffa, Olsson’s, Chadwick Consolidated Group and Morrisons UK.
Beef and dairy cattle are livestock agriculture’s biggest source of methane, which has more than 80 times the warming capacity of carbon dioxide.
While seaweed feed additives have so-far been excluded from the Australian government’s carbon credit scheme, other jurisdictions are implementing measures such as methane credits or sustainability subsidies for farmers.
Voluntary frameworks such as Verra allow producers to generate carbon credits from anywhere in the world.
When it came to global decarbonisation efforts, Sea Forest offered one of the few tools that actually delivered a return on investment, Mr Elsom said.
“They often have an extraordinary cost on the economy,” he said.
“Not to say that they’re any less important, just that the work we’re doing, in many ways, is low-hanging fruit.”
The organisation’s independent chair and agribusiness leader John McKillop said the product was a game-changer for livestock producers, even before the environmental benefits were considered.
“When you can look at something that gives you a 6 per cent improvement in net feed efficiency, there was big opportunity here to to not only improve the outcomes for the planet, but also improve outcomes for feedlotters, and will eventually flow on to … other livestock producers as well,” he told AAP.
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