Winnipeg-based Farmers Edge, one of the leading technology companies in the burgeoning precision agriculture field, has filed papers with the intention of going public through an initial public offering.
Founded 15 years ago by Wade Barnes, a farmer from Birtle, with some partners, the company has expanded its sophisticated suite of agronomy-related software solutions that help farmers reduce inputs, increase yields and lower their carbon footprint.
Farmers Edge’s technology — including data from weather stations, soil moisture probes, telematics devices, location tracking devices, grain cart weighing devices, soil sampling, irrigation monitoring and satellite imagery — is now being used to manage more than 23 million acres of cropland in Canada, the U.S., Brazil, Australia and Eastern Europe. Farmers pay various monthly subscription fees depending on the extent of the services they use.
The company is not yet profitable but information revealed in the prospectus shows 2020 revenues are likely to hit about $45 million, double last year’s totals and up from $14.4 million in 2017.
But the company’s losses are still sizable. In 2019 the operating loss was $74.2 million on revenue of $23.8 million.
Although final pricing has not been disclosed on the offering, it is anticipated that the offering price will be between $10 and $17 per share, with the expectation of raising between $100 million and $115 million. The offering is expected to close the week of March 1. The bottom end of that pricing would value the company at around $1.6 billion.
Fairfax Financial Holdings Limited currently controls about 63 per cent of the company; management and other investors hold 19 per cent; and about 16 per cent of the equity would be sold in the IPO.
About six years ago, Farmers Edge jumped to the head of the queue of precision ag startups with a sizable investment from the blue chip Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
Its stake was subsequently acquired by Fairfax, which is now responsible for about $300 million in debenture financing that would all be converted to common shares with the IPO.
With about 500 employees. including 294 in Canada, the company has been dramatically scaling up over the past few years with subscribed acres up from 6.2 million in 2017 to an expected 23.4 million at the end of 2020.
Over the past several months, the company has forged a number of strategic partnerships that have significantly reduced its operating costs.
While Farmers Edge was one of the first players in this market that relies on the analysis of massive amounts of data — three billion data points collected hourly — there are now a handful of large competitors.
But the company claims it is the "only comprehensive, unconflicted player with scale."
That claim alludes to the fact that its major competitors are Bayer-Monsanto and John Deere. The former is one of the largest global seed suppliers and markets a digital solution called Climate. John Deere is one of the largest farm equipment manufactures in the world.
But Farmers Edge’s digital solutions is equipment agnostic and believes it has a competitive advantage when it comes to independent-minded farmers who do not want to be beholden to any one supplier.
It has also partnered with a number of other prominent players in the production, distribution and insurance fields including Richardson, CNH (Case New Holland), Titan Machinery, Hefty Seed, Lindsay Corporation, Sumitomo Corporation, Parrish and Heimbecker and several others.
National Bank Financial Inc., CIBC World Markets Inc., Scotia Capital Inc., Canaccord Genuity Corp. and Raymond James Ltd. are underwriters of the offering.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.