Butterfly nets Californian bass producer

The Los Angeles-based firm, thought to be seeking $400m for its debut fund, received a commitment from the Indiana Public Retirement System in June.

Food-focused private equity firm Butterfly has acquired Pacifico Aquaculture for an undisclosed sum.

Pacifico was founded in 2010 and offers ocean-raised striped bass to North American distributors, retailers and restaurants. Its bass are raised near Todos Santos Island, eight miles off the coast of Northern Baja, California, where climate conditions and proximity to a submarine canyon support sustainable aquaculture.

“The future of ocean-raised sustainable aquaculture is extraordinarily bright and we are excited to back the Pacifico team to help expand their reach throughout North America and around the world,” said Butterfly co-founder Adam Waglay.

“It’s more about vertical integration today than it ever has been before”
Adam Waglay, Butterfly

Taking part in a panel at the Milken Institute conference in May, Waglay argued that responding to consumers’ demands for more information about healthier food will require a “systemic” approach, because many of the largest food companies in the US were established with a focus on optimizing manufacturing systems.

“It’s more about vertical integration today than it ever has been before,” Waglay said. “With fresh food in particular, it’s about cold-chain distribution. One of the things we thought about when we went to form Butterfly was that being a systemic investor in food was an exciting way to look at things.”

Addressing aquaculture specifically, Waylay mentioned that Butterfly’s first investment in the subsector had been in striped bass and that the company was looking to establish a platform it could use to bring about consolidation in the industry.

“Fish farming has some mixed perspectives; on-land versus ocean-raised. We spend a lot of time on ocean-raised because we think it’s more sustainable,” he said.

‘Seed-to-fork’ strategy

In June, the $30 billion Indiana Public Retirement System committed $75 million to Butterfly’s debut fund, which is reported to be seeking $400 million. According to the INPRS documents released around the time of the commitment, the firm will look to make investments of between $50 million and $80 million during the fund’s 10-year investment period.

Founded in 2016, Los Angeles-headquartered Butterfly describes its investment strategy as stretching from “seed to fork” to encompass agriculture, aquaculture, food and beverage products, retail distribution and restaurants. Waglay said at the Milken conference that the firm has committed to devote 10 percent of the profit it makes as an investor to the Butterfly Foundation, a nonprofit organization it has established to help feed hungry populations and expand access to healthy food.

Butterfly and US buyout house KKR hold a “significant” interest in Lemonade, a fast-casual restaurant chain offering what it calls “California cuisine.”