Argentina’s top agritech startup Bioceres to list on NYSE raising $100m+ in reverse IPO
Nov. 21, 2018
Bioceres develops, produces and sells genetically modified soybean, wheat, and alfalfa seeds as well as crop protection and nutrition products through a collection of 12 subsidiaries and joint ventures.
The company, which was founded in 2001 by a group of 23 Argentinian, reached an agreement with Union Acquisition Corp (UAC), a publicly traded company created by Juan Sartori, a renowned Uruguayan businessman set to run for President of Uruguay next year.
Through the transaction, UAC will absorb Bioceres’ core agricultural business lines — those that account for 95% of Bioceres current revenues — and change its name to Bioceres Crop Solutions. This will make available to Bioceres around $110 million of capital that UAC raised through its listing on NYSE.
Sartori, whose investment business Union Group has holdings in agriculture, natural resources, infrastructure, and real estate, will join Bioceres Crop Solutions’ board, but will not be involved in the governance of the business going forward.
“As a global agriculture investor, having the opportunity to invest in a pioneer in the agtech space that has built a market leading position in Latin America is a unique opportunity. We believe the global growth potential of Bioceres’ HB4 family of products represents a rare investment opportunity,” Sartori said in a statement.
So What Does This All Mean?
It’s a complicated transaction, but makes sense for an Argentinian company that faced market volatility earlier in the year, forcing it to delay its planned NYSE IPO. Bioceres also continues to face instability at home in Argentina not least with a fluctuating currency.
Reverse listings are commonplace across stock markets globally as a means for companies to become publicly-traded without a public fundraising event; in agriculture, they also frequently take place in the cannabis segment. (Incidentally, Sartori recently sold his cannabis business International Cannabis Corp to Canada’s Aurara Cannabis for $220 million, fueling the recent spike in cannabis stock prices, according to Bloomberg.)
“This deal with UAC was the perfect structure for what we wanted to accomplish,” Federico Trucco, CEO of Bioceres told AgFunderNews. “It minimized the execution risk of attempting another IPO and now helps us move forward on our planned path of becoming listed in New York.”
While the deal doesn’t provide liquidity or an exit for Bioceres’ existing 320 shareholders — they remain shareholders in Bioceres Holdings in Argentina — Trucco hopes that it could in the near future through Bioceres’ US subsidiary Bioceres USA. Trucco has wanted to list Bioceres for a couple of years now, as a means to access capital and build a globally recognized brand.
With the proceeds, Bioceres will increase its ownership of Rizobacter, the agriculture products retailer responsible for a significant portion of Bioceres’ revenues, to 80%.
“This is the compelling story of this deal; increasing our ownership of Rizobacter by 20%,” said Trucco. “The rest will go towards working capital to grow our business, which is also significant as getting finance locally in Argentina is increasingly expensive and if we want to do $400 million in sales next year, we need $100 million in working capital.”
The final value of the deal will be determined once shareholders of UAC decide to redeem their shares or stay on as shareholders in Bioceres Crop Solutions. Trucco added that there’s a backstop of $50 million, the amount needed to increase its equity holding in Rizobacter, as he can trade shares in Bioceres Crop Solutions for that stake if needed.
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