PE looks set to dine on aquaculture for the foreseeable future

Joint ventures, new funds and private placements all focused on securing exposure to new and existing aquaculture businesses points to a long-term interest in the industry.

Across the world in 2020, private equity has increasingly signaled its intent to back aquaculture ventures.

The previous year had been bookended with news of Vatne Equity committing further capital to Atlantic Sapphire – a show of faith at a time when the company’s highly anticipated Florida venture had yet to deliver its first harvest.

As Atlantic Sapphire’s interim chief financial officer Karl Øystein Øyehaug told Agri Investor in November, increasing investor confidence in land-based technology for recirculating aquaculture systems has created a shift in the investor base supporting the sector.

“As the [land-based] technology has been more proven, it has brought in a more international investor base and also it’s brought in more large, serious, long-only institutions and less of the typical family office, very free mandate type of investor,” Øyehaug said.

Greenfield RAS projects have proven attractive to private market investors because they can be located closer to the consumer, and can circumvent various environmental and long-term operational risks associated with ocean-based pens. These concerns range from the need to use chemical pesticides, the risk of escaped fish mixing with wild stock, financial loss due to high mortality rates and the build-up of waste underneath poorly located pens.

Some of these issues have encouraged Washington state, Canada and now Denmark to develop plans to ban or limit their use.

But this has not meant there is no room for PE to play in the traditional space of ocean-based pens.

A partnership between secondaries specialist Stafford Capital Partners – which plans to become a standalone operator in the space – and newly established Neptune, have found success with their midstream investment into maritime services company AquaShip.

The business services regions including Europe as well as North and South America, and has doubled its EBITDA since it was acquired at the end of 2019 despite a tricky year for salmon, Neptune founder Thor Talseth told Agri Investor.

Meanwhile in Asia, 8F Asset Management signaled its intent in April to raise $800 million for a salmon farming platform to be primarily focused on China, with plans to look elsewhere on the continent for opportunities.

And in Australia, the size of a potential aquaculture prize in the country’s tricky northern region has been sized up by the Cooperative Research Centre for Developing Northern Australia. The region has the potential to increase its production fivefold to more than A$1.34 billion ($886 million; €804 million) in value over the next five years, the body said.

In the state of Western Australia, Tattarang is eyeing opportunities to establish a vertically integrated shellfish aquaculture operation, and wants to establish itself as big supplier of the state’s domestic mussels market before pursuing export avenues of its own.

Based on this evidence, PE has only started to scratch the surface of its potential capital outlay into aquaculture.