Aquaculture-focused investment bank Lighthouse Finance will target €1 billion for its debut debt fund.
Managing director Howard Tang told Agri Investor the fund will finance both established seafood companies and innovative start-ups. The bank expects to raise the Lighthouse Aqua Fund in two tranches of €500 million, starting early next year.
Tang said the investor types likely to be targeted for the fundraise include pension plans and family offices in Europe, the US and Asia.
“We think a lot of the money will be drawn from European institutional investors,” he explained, due to the seafood industry’s established place in Scandinavia.
He added that the timing of the second €500 million fundraising effort would depend on how quickly the first tranche was secured.
The Lighthouse Aqua Fund will seek high single-digit annual returns by offering senior secured loans on terms of between five and seven years, with interest rates ranging from the mid-to-high single digits. Loan sizes are likely to range between $10 million and $190 million, with most falling between $10 million and $100 million, said Tang.
The majority of the fund’s investments will be loans to finance critical operating assets for established seafood and aquaculture companies. Lighthouse already works with some of the largest seafood companies, Tang said, financing operating equipment such as hatcheries, vessels and feeding facilities.
Most such companies, he explained, already have an established credit facility from a specialized aquaculture bank or a distinct unit within a larger bank that focuses on the sector. Rather than seeking to compete with these banks, Tang said, Lighthouse hopes to complement the agreements it already has in place by assisting lenders operating in subsectors or geographies where the firm has more experience.
About 20 percent of the fund’s investments are to be concentrated in lending to emerging companies in the broader seafood and aquaculture markets, such as those offering feed-monitoring technology or innovative sources of feed.
For investments where the firm is lending to support an established company’s capital expenditure, Lighthouse will likely seek interest rates in the mid-to-high single-digit range. Interest rates are likely to be slightly higher, in the lower double-digit range, for investments into emerging or start-up companies in the sector.
The Lighthouse Aqua Fund will have a global investment mandate, Tang explained, adding that sustainability and land-based aquaculture were among the investment themes of particular focus. He added that Atlantic salmon was likely to be the focus for many loans from the Lighthouse Aqua Fund and mentioned tilapia as being among the other species relevant to its current pipeline.