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Contributing to environmental solutions through investment in hemp

London investment firm Chrystal Capital has announced the £7m private placement of Change Agronomy, offering the opportunity for investors to contribute to hemp as an environmental solution to climate change.

As leaders from across the globe gathered for COP26 to discuss securing net zero emissions by 2050, businesses are looking for ways to reduce their impact on the environment. Planting trees is one solution – but hemp is also one material that is offering hope, as its production is carbon negative. Hemp also offers an eco-alternative material to plastics as numerous sectors begin to look to harness environmentally friendly alternatives.

Sustainably focused company Change Agronomy is already operating in the legal hemp market across North American and 30 other countries – a market estimated to reach US$26Bn by 2025.

The company is supplying carbon-negative products to multiple global end markets including automotive, textiles, bioplastics, packaging, biofuels and healthcare.

The private placement gives investors 24% of the company and has been structured through a UK holding company to position the company to be a potential London Stock Exchange Main Board listed company on a 12-month view. 

So far, the offering has had significant investor interest from High Net Worth individuals, family offices, wealth managers, and impact, sustainability and ESG funds, and is expected to close in early December.

“What’s exciting about this is the opportunity to be involved with a very macro level in what is probably one of the most sustainable businesses that we’ve ever come across,” says Kingsley Wilson, founding partner at Chrystal Capital Partners.

“An acre of hemp sequesters around 10 tonnes of carbon every 100 days, which compares to a rainforest taking two and a half tonnes every 20 years. So, the ability to take huge amounts of carbon out of the atmosphere via industrial hemp cultivation fits perfectly with a major global driving thematic investment trend at the moment, with governments, companies and investors all trying to figure out how to get to carbon net-zero by 2050.

“I would call this nature’s technology, or solution, to the problem that has been created by humans, first of all by polluting the world, but also then inexplicably banning hemp over the past 80 years. At scale, this could become a very major solution to global warming, but also a great solution for multiple different global industries from textiles, bioplastics and electric cars in terms of how this hemp plant and its multiple end products, once processed properly, could be used to create sustainable products. For example, hemp bioplastics can degrade in 72 days, not 1000 years.”

Change Agronomy owns the rights to seven premium hemp genetics globally and has a seed propagation facility in Italy that facilitates global supply at a large scale – having already grown 9,600 acres to date, along with 44m pounds of hemp biomass on-site at a fully operational state-of-the-art hemp facility in Canada.

“Change Agronomy has been in the industrial hemp market for several years, they truly understand how to do this at scale and substantially de-risk this proposition. They have farmed nearly 10,000 acres already – they have learned how to farm with the best genetics, to efficiently take it off the field, and process it through a state-of-the-art facility that creates multiple end products from the hemp plant fractions.

“Because they can supply all of these different end fractions from that hemp plant to all of these different industries, they have got lots of different customers queuing to get access to these products which are now available for the first time at scale. This is a company that is going to generate great revenues and profits in the very near term as well, which we believe is going to be a strong driver of shareholder value and upside for investors,” added Wilson.

“In 1941, Henry Ford built the first net carbon zero car built out of hemp and fuelled by hemp ethanol right around that time it all got banned. Now, 80 years later there is this big drive towards making cars more sustainable and to go electric. Generating electricity to power those cars is still burning fossil fuel, whereas hemp has solutions in terms of the fuel and in terms of how you make more sustainable and biodegradable cars.

“A lot of these industries are growing up alongside Change Agronomy, so, investors are getting the chance to invest at ground zero in the whole global hemp supply chain which is forecast to grow to US$25bn by 2025, making it one of the fastest-growing sectors in the world. More of these companies all wanting to use sustainable hemp end products are going to spring up across all of these different sectors and there will be more demand for what they produce at large scale.”

With carbon offsetting set to become a major contributor to the reduction of emissions across the economy, Wilson says the potential for Change Agronomy to create carbon credits will be a key component of its future growth.

“Governments are behind the move towards sustainability. So, in addition to investor capital, we can get relatively low-cost funding, or government funding, to help fuel the growth of this business.

“There are also lots of companies out there polluting the world which want to buy credits to absolve themselves for what they are doing. Therefore, we think the carbon credit market is going to become a very big piece of all of this, and Change Agronomy will be a major source of credit. Not just growing it in the field, but when you put hemp to end products like insulation and housing, or hempcrete – it continues to take carbon out of the atmosphere so they will be eligible for further credits.

“That makes this interesting because, at scale, those carbon credits could make the whole farming and operation side free, and therefore dramatically increases the profitability of the business.”

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