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RedSea rules out listing in search for growth

RedSea founders Ryan Lefers, right, and Mark Tester RedSea
RedSea founders Ryan Lefers, right, and Mark Tester
  • Agtech business RedSea has raised $37m to date
  • It has ruled out an IPO for the time being
  • The company works in the UAE, Egypt, Europe and the US

Sustainable agriculture business RedSea has revealed plans to raise extra funds, but has ruled out a listing for the company for the moment.

Founded in 2018 by plant scientist Mark Tester, agriculture engineering expert Ryan Lefers and material scientist Derya Baran, the Saudi-based agtech startup aims to find ways to feed populations in the face of diminishing resources.

A spin-off from the King Abdullah University of Science and Technology (Kaust), its technology uses sunlight and saltwater to cool greenhouses and grow crops instead of relying on rainfall, fresh groundwater or desalinated water.

To date, the company has raised in the region of $37 million, which has largely been used for product development and establishing proof of concept sites.

Investors include Kaust, the Future Investment Institute, Savola Food Group and Global Ventures, as well as three US-based funds.

The company also received a $2.5 million green term loan from HSBC.

CEO Lefers told AGBI: “We’re taking it day by day, watching the market, looking to bring in the money we need for growth, but we’re looking at different sources of capital.

“We’re in touch with multiple potential partners about funding and growth and how we can make it work.”

Data from investment fund Wamda found that agtech startups in the Middle East and North Africa raised $242 million across 32 deals in 2022, accounting for around six percent of the total raised.

Listing ruled out

Last year, 71 IPOs were completed in the Middle East for a combined transaction value of more than $25 billion, according to S&P Global Market Intelligence.

The trend has continued into 2023, but Lefers instead that RedSea would not be following, for now.

He said: “It’s possible. I would say in today’s market it’s not the attractive option, but we know that the market has its ups and downs.

“We’re focused today on helping to get our products into as many hands as we can. An IPO or exit will happen some day.”

Food security is a pressing issue in the GCC. Saudi Arabia is investing heavily in new ways of food production for its expanding population. The kingdom is reliant on imports to meet up to 75 percent of its consumption needs.

Last month RedSea launched greenhouse facilities in Al Ain which aim to “supercharge” wider adoption of technologies in the UAE to benefit local growers.

The company is also working with partners in Egypt. 

“As a company our mission is to feed the world sustainably and Egypt is a perfect place to do that. The scale of it is huge, as it gives us the opportunity to have a wider impact in the Mena region and into Europe.” said Lefers.

The company is also supplying its technologies to other growers in hot places around the world, including Spain and Portugal in Southern Europe, the Southern US and Mexico.

Lefers added: “It’s not just one region that’s facing heat and food security issues, it’s something we’re all dealing with.

“So really the whole world is a market for us.”