Bioceres develops, produces and sells genetically modified soybean, wheat, and alfalfa seeds as well as crop protection and nutrition products.
In November 2018, Bioceres did a reverse listing on the NYSE, valuing its core business at $450 million, in a deal where a shell company already listed on the exchange absorbed Bioceres and changed its name (find out more details here). Bioceres had intended to do a full IPO earlier in the year but delayed due to volatile markets.
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.
Milesy, founder of Glocal AgriFoodTech, the country’s first agtech accelerator, wanted to find out more about Bioceres’ decision to list and if it could make sense for other agtech startups in the country.
Bioceres is also located in Rosario, a region of Argentina that’s fast becoming the home for agtech in the country.
If you’re in the region and happen to have time next week, join me at the second edition of AgTech Week in Argentina – where we’ll be traveling from Cordoba to Rosario and ending in Buenos Aires to meet with farmers, entrepreneurs, and investors operating in or considering agtech. I went last year and loved it!
Bernardo Milesy: Why was a listing on the New York Stock Exchange the best route for Bioceres to take?
Federico Trucco: It’s always hard to tell if one route was better than others because we only know after the fact and not before. Bioceres had a strong desire to become a listed entity for number of different reasons. For one, we have a highly fragmented investor structure and we feel that type of ownership structure would better fit the dynamics of the public market. We also recognized that the Latin American market, especially in Argentina, is really small and so probably doesn’t have a tradition of investing in high technology stories, so we that’s why we decided to come to the US which has far more experience in this particular space. We decided to do a reverse listing instead of an IPO because there was some macroeconomic turbulence in Argentina but we had imminent growth opportunities and so couldn’t wait for the right time for a traditional IPO.
When do you plan to tap the New York Stock Exchange to raise funding?
Today we are not anticipating going to the public markets to raise traditional funding. When we listed, we were able to raise around $50 million which was enough to do acquisition of some minority interests in companies that we already controlled, such as RIZOBACTER where we have an 80%. The company has a net debt that is about 2.5 to 3 times our EBITDA (earnings before interest, tax) which isn’t too significant for us to need near term capitalization, although it’s not off the table forever.
Are there other comparable listed companies in the US exchanges that you could mention?
We look for comparables because that is something that investors always want to see. We traditionally have looked at three buckets of companie: the group of Big Six agribusinesses, that are today maybe big four, including Monsanto, Bayer, BASF, Syngenta, Dow and DuPont. These are conglomerates that are global leaders that participate in some of the segments in which we participate but I think we have a different business approach. Then you have the traditional startup world that became public before making profits. These are companies that are more R&D oriented where the strategies depend on licensing technology out or in.
So I feel they do capture the R&D component of the story of Bioceres with the caveat that they don’t have today a go–to–market strategy, which we do. I think this is a very significant differentiator. Then there are companies that are still private like Indigo Ag in Boston or FBN in California that are attempting to put together disruptive propositions for private investors that are looking at agriculture as an industry where disruption is going to happen.
We feel these are probably closer comparables than some of the more traditional players that are in the public markets today.
Would you recommend a public listing to other agtech or biotech startups?
I think that the public markets are very demanding but they give you a toolbox that is very useful for achieving high growth. I believe the question is mostly about timing – when should companies become public? There’s often thinking in the public markets that it’s a means to an end and not a final outcome. If you are thinking about the public markets as a way to exit an investment, I am probably not the right person to provide thoughts on how convenient that is.
If you’re thinking about the public markets as a way to generate a platform of your company to accelerate your growth for increased visibility that would come at a cost, I think it can be tremendous. It takes a lot of preparation and it can be very demanding so timing from a company’s evolution perspective is critical.
What I would say is maybe we went into this a little too early in the past and when we were ready from the company’s maturity perspective, there was a bit of fatigue and we paid for it. I obviously recommend public markets, but for the right time in the company’s evolution.
What do you think about Rosario’s positioning as an epicenter of agribusiness and innovation in Argentina?
I think part of what we do has been possible because we were able to interact with people that are passionate about agriculture and that is probably part;y the tradition of Rosario; it’s an agricultural part of Argentina and we have an old tradition in agribusiness. But on the other hand, it’s also possible because of the creativity and originality of the scientists and entrepreneurs and that’s also true about Rosario. So when you combine the passion that is generated by the deep–seated tradition of fourth generation, descendants of farmers that have operated in this market, and the innovation opportunity generated by science with the entrepreneurs, that is available today, I believe this is probably unique and that lot of stories could emerge from this ecosystem.