Ag-tech play RotoGro teams up with strategic organic produce group
Published 24-AUG-2018 14:57 P.M.
|
5 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Ag-tech cannabis play, RotoGro International (ASX:RGI), has penned a strategic deal to clinch a joint venture with Freshero in the organic, fresh produce supply industry.
This deal will see the purchase and sale of RotoGro rotational hydroponic garden systems and services, with a formal agreement to include a commitment for 600 of such systems within 24 months.
Freshero is an aspiring organic fresh produce grower with long-standing relationships across the wholesale, retail and food service space in Australasia and Southeast Asia. With CEO Tony Mahoney at its helm, Freshero is establishing urban farming growing facilities and distribution centres for fresh organic produce grown in close proximity to large urban centres.
Prior to founding Freshero, Mahoney was the founder and CEO of Nutrano Produce Group, CEO of Freshmax Group, and held several senior positions at Woolworths (ASX:WOW) for more than 10 years.
During his time at Nutrano, Mahoney oversaw the vertical integration of key fruit categories, providing supply chain expertise from farm to plate. He also oversaw the growth of Freshmax (backed by Wolseley Private Equity), which became the largest independent fresh produce business fully integrated across Australia and New Zealand, securing long-term supply partnerships in Australia, New Zealand and across the globe.
Meanwhile, the HOA and future JV agreements will leverage RGI’s patented and proprietary rotational hydroponic garden systems, crop management fertigation hardware and software systems as part of Freshero’s urban vertical farming offering.
RGI’s automated rotary hydroponic vertical farming system produces consistent, high-quality plants indoors, using less space and energy than a conventional hydroponic environment, and at lower cost. It results in 10 times the production of traditional ‘flatbed’ growing in the same amount of floor area, using 40% less electricity.
Freshero will secure in-principal supply agreements with critical domestic and international wholesale customers for retail supermarkets.
Post due diligence and initial testing, Freshero has committed to order a minimum of 100 RotoGro systems upon completion of its due diligence and initial testing.
RGI will supply the capital equipment, software and management time at agreed rates, pursuant to a JV agreement. In return, Freshero will commit to exclusive long-term service agreements with RGI for the installation of new indoor vertical farming facilities and ongoing operational management and maintenance.
On top of that, Freshero will pay RGI a revenue-based royalty per facility, which will be negotiated.
It’s worth noting here that this is an early stage play and investors should seek professional financial advice if considering this company for their portfolio.
Freshero will have a worldwide first right of refusal to use RotoGro rotational hydroponic garden systems for fresh produce.
The HOA provides for an initial testing period of 120 days which will begin on October 1 this year, enabling the duo to share growing know-how and to kick off cultivation of key product lines at the company’s research and development grow rooms in Caledon, Ontario, Canada. The initial testing period will host growers from Freshero RGI’s facility, allowing them to establish baseline crop yields for their initial selected products and varieties.
During the training and testing period, the two parties will collaborate on key terms for a definitive JV agreement, which will also include a joint business plan and facility design for Freshero’s first urban farming facility.
The proposed price to be paid for indoor vertical farming facilities is subject to refinement during the design phase. However, the order for the 100 units and related fertigation systems is anticipated to be between approximately C$1,050,000 and C$1,500,000 (depending upon the size and configuration of the units).
Freshero CEO, Tony Mahoney, commented: “We are very excited with the opportunity to enter into this agreement with RotoGro and to establish urban farms around the world utilising RotoGro’s patented and proprietary technology.”
“The need for environmentally responsible local farms which defy traditional growing seasons whilst ensuring consistent quality organic produce year-round is ever increasing. RotoGro’s proprietary technology is cutting-edge and leading the way for the future of agriculture.”
RotoGro Managing Director, Michael Carli, said: “The company has identified organic produce as a significant untapped market opportunity providing exposure to further sales revenue.”
“RotoGro can leverage its proprietary growing and crop management systems, in partnership with Freshero, to take advantage of a prime opportunity to revolutionise the agriculture industry by providing high quality organic fresh produce in a controlled environment, grown in close proximity to major retail distribution centres.”
“We will keep our shareholders updated with Freshero’s advancements over the initial testing period and we look forward to working with the Freshero team to maximise the global opportunities within the fresh produce industry and future potential sales for RotoGro.”
General Information Only
This material has been prepared by Jason Price. Jason Price is an authorised representative (AR 000296877) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573) (62C), and a Director of S3 Consortium Pty Ltd (trading as StocksDigital).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, Jason Price, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, Jason Price, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.