responsAbility backs Indonesian aquaculture unicorn with $40m

Head of sustainable food private equity Rik Vyverman says Indonesia is a promising market that shows investors often underappreciate opportunities available in countries labelled as ‘emerging.’

Switzerland-headquartered impact asset manager reponsAbility Investments was among investors in a $200 million Series D round for eFishery, an Indonesian aquaculture company valued at more than $1 billion.

responsAbility contributed $40 million to a mid-July round that valued eFishery at $1.4 billion, and was led by Abu Dhabi-based 42X Fund and also included existing investors Temasek, Softbank and Singapore-headquartered Northstar Group, among others.

eFishery is headquartered in Bandung and was established in 2013. It offers an Internet of Things-enabled device that optimizes feeding and gathers data that allows the company to offer smallholder fish and shrimp farmers access to markets, financing and enhanced practices.

responsAbility head of sustainable food private equity Rik Vyverman told Agri Investor that eFishery is already a household name within Indonesia’s extremely fragmented market of fish farmers. The company has built a network that allowed for bulk purchases leading to lower feed costs, he said, and was in a position to pick and choose investors in the Series D round.

“You’re looking at a company that has attractive financial metrics, that is growth. You’re looking at a market that is large and continuing to grow where they can increase market share through disrupting the way things work. We are also improving incomes of smallholder farming as this company grows, and introducing more sustainability metrics,” he said. “It fits in our impact strategy on one hand; at the same time, it also meets our return requirements.”

Vyverman said the company was interested to work with responsAbility to help ensure the best environmental and social practices are followed as it expands its network of fish and shrimp producers.

eFishery’s plans include investments to meet more stringent food safety standards required for sale to markets in the US and Europe. Over the long term, Vyverman said, the company’s strategy could include potential expansion into surrounding countries such as Vietnam, Thailand, and India, all of which have similarly large and fragmented aquaculture sectors.

“The focus is predominantly on further growth in Indonesia and tapping into export markets. Export markets obviously give you a higher price for your fish and your shrimp, not only for them [eFishery], but also for their farmers, higher income and higher margins. There is the potential of pretty much unlimited growth with regard to the other countries that I mentioned,” he added.

responsAbility’s eFishery investment drew from its Sustainable Food in Asia Fund, which reached a first close on $173 million toward a $400 million target in January. The firm also hit a $101 million close on a distinct vehicle focused on Latin America at the start of the year, which has a $350 million hard-cap.

Vyverman said the fact that responsAbility was acquired by UK asset manager M&G in May 2022 and has secured anchor investments from Prudential Insurance Company into both regional vehicles has helped bring the firm to the attention of larger investors.

“Whether we like or not, size matters. Size matters for your LPs. Size matters for your companies, especially when they continue to grow and require more significant amounts of money,” he said. “Having a significant anchor investor that gets you on the way with your fundraise, and gives you more credibility of reaching a certain size with your funds, obviously gives you access.”

responsAbility focuses on debt and equity investment across emerging markets and had $3.7 billion in assets under management at the time of its acquisition. Vyverman said Indonesia is a good example of a market that often gets overlooked due institutional investors’ tendency to assume developing countries are too chaotic.

“If I look at government finance and compare these countries with regard to current deficit, their total debt levels; they are very often in much better shape than the European or US market,” he said. “I don’t like that term, ‘emerging markets’, too much because there is a lot that is already in place, including rule of law and political stability. These are no longer the countries from 25 years ago.”