AMERRA Capital Management senior associate Anthony Ferrara has said that its acquisition of a 51 percent stake in Norway-headquartered maritime services provider AquaShip aimed to capitalize on opportunities created by increasing regulation of aquaculture.
Aquaculture’s high level of scrutiny and complex biological risks mean that even the market’s largest companies find it difficult to stay up to date, Ferrara told Agri Investor. He added that regulatory policy would affect areas such as water filtration, transportation of vessels between zones, and inoculation procedures.
“We’ve seen more of a trend of farmers outsourcing the service than the other way around,” he explained. “As the farmers start leaving Norway and moving to higher-growth markets, what we see soon thereafter is they are requiring the same level of service that they were requiring in Norway.”
AquaShip operates a fleet of 28 shipping vessels that includes fish-feed carriers, wellboats, harvest vessels and service vessels capable of supporting aquaculture production.
AMERRA acquired its majority stake this month through an unspecified growth capital investment.
Ferrara said that among the four vessel types in AquaShip’s fleet, many of the most attractive opportunities are concentrated in harvest vessels and wellboats. The latter function as “floating fish hospitals” and are starting to face increased regulation in Norway.
“For example, when you are transporting fish from out at sea to processing facilities, we are seeing a trend towards not allowing unloading in waiting pens for biosecurity reasons,” he said. “The wellboat needs to stay there with the fish in the vessel and that creates demand for more wellboats. We are also seeing a trend towards more limitations on how vessels move between different production zones also driving wellboat demand.”
AMERRA acquired a majority stake in Norwegian peptide producer Marine Bioproducts in March 2017. It then announced plans to combine that company with biorefining provider Alkymar in order to focus on production of seafood-derived protein additives.
In June 2018, AMERRA teamed up with $229 billion Abu Dhabi-linked sovereign wealth fund Mubadala Investment Company to support its portfolio company Andromeda’s acquisition of Mediterranean sea bass and sea bream producers Selonda and Nireas.
Similarly to those deals, Ferrara said the AquaShip investment was designed to bring practices and technology from Norway’s highly developed salmon industry into new markets and species.
Of AquaShip’s 28 vessels, 26 are devoted to salmon and only two focus on the production of other seafood species.
AMERRA head of capital markets David Gould said that investor interest in aquaculture is increasing. However, he added that the difficulty some larger institutions face in justifying the use of their limited due diligence resources for relatively small aquaculture deals was likely to have slowed the pace of activity in the sector.
Gould said companies like AquaShip can attract a variety of investor types because they offer services on three- to four-year contracts that create certainty of cashflows of a type rarely seen within agriculture. He highlighted Antin Infrastructure Partners’ September 2018 acquisition of Norwegian wellboat company Soltrans as a similar deal.
“Whether prices go up or down, salmon farmers continue to need these services and AquaShip’s fee has nothing to do with their performance,” said Gould. “We’re not a first-derivative exposure to salmon prices. For folks that are looking to get into this space, that is an important feature.”
AquaShip also has operations in the UK, Iceland, Chile, Spain, Greece and Croatia.