When Zenith Agro Group Limited (ZAG) Singapore completes its upcoming proposed backdoor listing targeted for December 2017, it will usher in a heady new scent to the Australian stock market. This will signal the very first listing in the world for the Agarwood industry, which includes plantation management and a multitude of its highly prized scented products, which gives the Agarwood the mantle as the King of Scents.
ZAG will make its entry on the Australian Securities Exchange (ASX) via the ASX-listed BKM Management Limited (ASX:BKM, BKM:ASE) (BKM), in a reverse takeover deal worth AU$45 million, subject to the BKM’s shareholders approval and re-admission approval by ASX Limited. Currently ZAG’s equity offering is in place for interested investors, projecting an attractive capital appreciation, pending BKM’s completion of a pre-IPO/IPO funding.
ZAG is an international company headquartered in Singapore with a strong presence in Indochina. Its current focus is on Agarwood, a resinous wood that produces a rare oil called Oud, whose worldwide demand is growing year on year for use in fragrances, cosmetics, daily care and health products. Oud has been long-coveted for centuries as a tribute oil and especially prized in the Middle East as the scent of wealth.
As an example of the current value of Oud oil, the price of a single kilo in the first quarter of 2017 was between US$18,000 – 60,000 depending on quality and source.
The company’s unique strength is that it manages and owns the entire supply chain of this valuable commodity, with its own plantations and distillery. Through its subsidiaries, ZAG’s value proposition is to own a stake in the development of a high-end line of branded consumer products and retail sales based on the scent of Oud.
Agarwood is produced in Aquilaria trees when they are inducted with microbes, triggering the tree to produce a dark resin at its core, which contains the fragrant Oud oil. In the wild, the rate of success in harvesting trees containing this treasured oil is very low and rare.
However, at the heart of ZAG’s success is the introduction of its proprietary inoculation technology that ensures a much higher yield than the industry average. ZAG’s Unique Selling Proposition will be consolidating a fragmented industry that is currently worth US$6-8 Billion.
Looking forward, ZAG is planning to increase its plantation assets in ASEAN and develop new ventures in China and Asia-Pacific, building on the relationships it has successfully forged with local authorities. It also aims to diversify its business interests into other crops and partner brands.