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Seven Funds eyes $200m aquaculture fund – exclusive

Southeast Venture Holdings is considering launching an institutional fund to target the sustainable aquaculture sector. It is currently raising $75m for its Healthy Earth sustainable food brand.

Seven Holdings, a hybrid venture capital and private equity firm, is launching a $75 million capital raise for its Healthy Earth sustainable food company next week.

The round is likely to precede the launch of a $100 million-$200 million private equity fund targeting aquaculture and sustainable food later this year, Chris Cogan, partner, told Agri Investor. Healthy Earth is likely to be rolled into that fund, he added.

“We know that we need to build scale quickly to solidify our company as a brand that will not compromise on food safety and quality,” said Cogan. “If we can scale that brand relatively quickly – then we will be able to build a dominate position in the sustainable food sector.”

Healthy Earth was formed by the Seven team last year with the goal of becoming the leading sustainable foods company in the US, according to its website. And the equity-raising round already has strong interest from high net worth individuals, venture capitalists and foundations that could become lead investors committing around $20 million each, he said.

“We do have several investors discussing $20 million to $25 million but we may just take one lead and fill the rest with smaller commitments,” said Cogan. “We are still working this out.”

But there is increasing interest from the pension fund industry too, said Cogan, adding that this is the emphasis behind launching a fund.

“The growing majority of investors are interested in sustainability – sustainable and healthy food,” he said. “There is a paradigm shift going on around the world led by millennials who care about the planet and baby boomers concerned with their health and longevity. It’s a trend, not a fad and it won’t be waning over next few years.”

Healthy Earth will focus on the marine sector initially but could expand into other food products, according to Cogan.

“The company will produce the freshest, most nutritious foods possible while also promoting sustainable and, where practical, organic farming best practices,” reads the website. “Through our modern expertise in aquaculture, aquaponics, microbiology, feed production and farm management we are developing innovative, commercial-scale, operations and alternatives to how sustainable foods are produced and sold.”

Seven has already deployed capital into the marine sector from its own capital base; the holding company was funded by the three founders – Russell Vernon, Ross Barrett and Chris Cogan – and a range of venture capital partners when it formed in 2013.

It has enough capital to deploy into companies in the pipeline over the next six months, said Cogan.

Last November, the firm acquired a sturgeon and caviar production operation from Mote Marine Laboratory, a non-profit research centre and aquarium. The investment was absorbed by Healthy Earth but Seven also acquired intellectual property relating to caviar production that could be leveraged elsewhere, said Cogan.

“My partners have a long history of commercialising science out of research institutions,” he said. “Mote had created a lot of science but didn’t know how to commercialise it; we have that expertise.”

Seven is also interested in technology companies that can contribute to sustainable food production, said Cogan.

“We are interested in utilising the by-products from aquaculture such as fish carcasses for emulsions and omega 3s and fish effluent to create chemical-free pesticides and fertilisers for organic agriculture application,” he said.

Seven Funds already has a health and life sciences fund which is currently deploying capital.