Spenda Limited (ASX:SPX) has reached a significant milestone by expanding into the agricultural vertical through a binding agreement with AgriChain Pty Ltd, offering unique early payment services to grain growers on the AgriChain Platform.
The Spenda and AgriChain agreement will furnish Spenda with an early payment program (EPP) for AgriChain’s customers via the Spenda Payment Widget product, utilising a card-blended finance solution that runs alongside Spenda’s existing debt warehouse structure, eliminating the need for first loss capital or credit enhancement.
During Phase One of the program, starting in the second quarter of 2024, Funds in Use will be limited to $10 million and will involve a small segment of AgriChain’s customer base.
Revenue generation from these customer onboarding efforts is scheduled to commence in the second quarter of the following year, with Phase Two set to begin in early 2024 after the successful completion of Phase One, involving the deployment of the Spenda AgriChain solution to all eligible AgriChain customers.
The strategic new project is poised to enhance Spenda’s profitability, with Phase One of the program projected to yield an annual net revenue of $1.5 million, sharing revenues at a 75% to 25% ratio between Spenda and AgriChain.
This partnership offers substantial market potential for the Company, given that AgriChain is estimated to manage approximately $2.2 billion worth of grain on their supply chain platform at any given time and provides access to 10,000 users through an Enterprise Resource Planning (ERP) system that facilitates connections between buyers and sellers in the agricultural supply chain.
The AgriChain network comprises around 10,000 users, including traders, producers, manufacturers, retailers, farmers, and grain storers, with traders encompassing brewers, flour millers, animal feed manufacturers, and other grain commodity users.
The ultimate objective is to gradually shift the current transactions on the platform to be processed through Spenda’s payment platform.
Inline with Spenda’s Strategy
The Spenda AgriChain Solution’s implementation aligns with the Company’s ‘Node-to-Spoke’ execution strategy, rolling out services to AgriChain (the ‘Node’) and its vast network of over 10,000 connected users (the ‘Spokes’) to enhance business efficiencies via software, payment, and lending services.
Spenda is strategically positioned to leverage its strong pipeline of activities by venturing into the livestock and horticultural markets through both existing and new partnerships.
This partnership signifies a substantial operational milestone as the Company expands into the agricultural sector with an innovative payment solution for agricultural supply chain platforms.
AgriChain CEO, Caile Ditterich, expressed that Spenda’s distinctive payment solution seamlessly aligns with their platform, facilitating connections between diverse buyers and sellers across the agricultural supply chain.
“Our customers need direct, secure and easy access to a range financing options and Spenda’s ‘early payment program’ will enable our customers to improve their cash flow and working capital management,” she said.
“We expect our partnership with Spenda will accelerate our growth through increased transaction volumes on our platform and we may expand into other commodities such as fertiliser and other farm inputs.”
Spenda’s Managing Director, Adrian Floate, emphasised that the agreement represents a transformational opportunity for both Spenda and AgriChain.
“The unique solution solves a genuine market need for payment automation for grain stored on farm,” he said.
“The partnership will bring significant benefits to buyers and sellers in the AgriChain community and set the benchmark for payments in on-farm stored grain trading.”
“This partnership also highlights the versatility and application of our payments solutions to new verticals, from franchise groups and online market places to cross-border trade and now agricultural trading networks.”
SPX’s Australian Stock Exchange-listed share price has risen 7.692% and is currently trading at $0.014 today (11:30am UTC+ 8 hours).