Macquarie Infrastructure and Real Assets this week backed, along with other investors, a A$34 million ($26 million; €22 million) fundraising round for Sea Forests, a Tasmanian firm specializing in the cultivation of asparagopsis – or, to put it more plainly, a seaweed farmer.
Sea Forests is the major supplier of seaweed to FutureFeed, a business that uses the algae as an additive in livestock feed. Its use reduces methane emissions from beef and dairy production by up to 80 percent, according to research trials conducted in Australia and the US.
FutureFeed was launched by the Commonwealth Scientific and Industrial Research Organisation, Australia’s national science agency. It was backed by a group of investors including a joint venture between AGP Sustainable Real Assets and Sparklabs Cultiv8, ASX-listed GrainCorp, Andrew Forrest’s Harvest Road (managed by his Tattarang family office), and Australian supermarket giant Woolworths.
Earlier this year, Sea Forest received a commercialization grant of A$1 million from the Australian government, ahead of the latest fundraise announced this week.
Sea Forest CEO Sam Elsom told the Australian Financial Review this week that investors had reacted positively to its fundraising round: “The only way this technology will have an impact is if we have a lot of seaweed and a lot of people using it. Sea Forest won’t stop growing and we want to see as many cattle as we can on this feed supplement.”
Australia’s beef and sheep industries have already been at the forefront of the issue of lowering emissions, having launched separate sustainability frameworks in the last two years (the sheep framework as recently as last week).
Although those frameworks focus on more than just emissions (covering vital issues such as animal welfare and financial resilience), the impact on the environment is an important strand to both.
As Don Mackay, chair of the Red Meat Advisory Council and fund manager at New Harvest Investment Management, told Agri Investor in 2019: “A lot of customers want to know you have welfare and environmental standards, they want to know you’re paying your people properly and they want to know you’re audited – those things are a given before the door even opens [to new markets].
“They say, ‘If you want us to invest, these are the hurdles and expectations you have to achieve, and then you can have the money.’”
Demonstrating ESG credentials is vital to keeping those doors to capital open, as ag investing naturally goes hand-in-hand with sustainable investment strategies when done right.
There are conflicting views about asparagopsis, with some suggesting its potential benefits may be overblown.
But the appetite to invest in Sea Forests and ventures like it is real. It might be risky, but it is further proof that investors are hungry for these types of opportunities.