Norway-backed Argentine white fish firm seeks investor ‘partner’ to finance M&A in new species

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Norway’s Ocean Harvest, which owns Argentine fishing firm Estremar, is looking for an investor ‘partner’ to help finance M&A in new species, seeing an opening in the Latin American country after the upcoming election.

The company is looking to raise around $70 million from selling a minority stake of up to 49%, chairman Webjorn Eikrem toldUndercurrent News.

“We are looking at industrial partners with good financial strength so that we can do financing together on [M&A]projects in Argentina,” he said.”We would be willing to go to 50/50; it depends on the partner if we find a partner we trust. We are not very complicated people. So, if I could look them in the eye and say this is what we do together jointly. We can live with 50/50.”

DNB, Norway’s largest bank, and Antarctica Advisors, a seafood-focused corporate finance boutique based in the US, have been retained to run the process. The two firms have “different customer bases,” hence the joint engagement, said Eikrem.

“I have told both AA [Antarctica] and DNB they have until the end of the year, and if we don’t get a partner, we will leave it as it is. We should be able to grow the company anyway, but it will take longer,”he said.

Ocean Harvest’s Estremar is active in hoki, toothfish and southern blue whiting but aims to move into other species through M&A.

“I think the main growth avenue is going be other species. There’s no wish for us to increase in toothfish; the cap is there,” he said.

Estremar has 1,400 metric tons of quota for the prized Patagonian toothfish, as well as 10,213t for hoki and 1,862 for southern blue whiting, which it’s currently refitting the Centurion del Atlantico factory trawler to turn into surimi. The company has then acquired another vessel to catch its toothfish quota.

Argentine shrimp is the “obvious” species for expansion. “Then, squid and scallops. If we secure a partner, we can move fast; if we don’t, it will take some time,” he said.

The company is also looking beyond its fishing routes for growth. “If a partner comes along with land-based processing experience, that will be an option,” Eikrem told Undercurrent.

Eikrem, Norwegian but has been working in Argentina since the early 1990s, said he sees openings in the country after the upcoming election.

“I’ve been around in Argentina a long time; I have been there since 1992. I was there in ’92 on board the ship when it first arrived, so I know you’re not coming in and out of Argentina within two years, thinking you will make money. You need to be long-term,” he said.

“Our reasoning for this is that we believe there will be opportunities in Argentina after the election. We strongly believe that the election will be on the right side so that we can have a more business-friendly approach. Maybe not the first year, but there will be openings in the next three to four years, “he said.

Javier Milei, a right-wing populist and ultraliberal economist, is currently leading the polls in Argentina. One of his policies is to dollarize the economy, which has caused the peso to dive in value. The election will take place on Oct. 22.

“It’s tough for banks to finance anything in Argentina due to the restrictions and other things,” he said. “And certainly, we need a strong partner on the outside to be able to pull off acquisitions. So that is the reasoning; there’s nothing dramatic about it. We want to secure ourselves with the correct partner with the same outlook on things as we do.”

Then, it’s conditional to keep Estremar as the operating company, he said. “We think we have excellent management there led by Alan Mackern, and we want to build on that. That is one of the strict requirements we will have with a partner: that we will have Estremar managing the joint venture.”

Centurion del Atlantico surimi refit

The share sale move comes as Ocean Harvest is in the middle of a$40m refit of Estremar’s Centurion del Atlantico factory trawler in Norway for surimi production. The vessel’s refit is “fully financed” and has nothing to do with the fundraising, said Eikrem.

“We’re putting in all kinds of newer technology that exists today. We will produce high-quality surimi when we return to Argentina in May-June next year.”

The 118-meter Centurion delAtlantico was built in 1986 by Japan’s Mitsubishi Corp. for surimi production, then sent down to Argentina in 1992-93. “I worked on the Centurion in ’92 as a fish master,” said Eikrem.

Ocean Harvest has also acquired another vessel, the 63-meter SanArawa II, which it has converted to harvest toothfish, which Centuriondel Atlantico was previously doing. In 2019, Estremar inked a deal to manage San Arawa’s vessels.

“Estremar had management on San Arawa in the last couple of years, but the vessel was doing hoki fillets. So, we know it very well. We think it’s better suited for the toothfish fishery than Centurion was,” he said. “On the Centurion, we have rebuilt everything, from the main engine to the propeller shafts, a fishmeal factory. She will be a great surimi producer and San Arawa II a perfect vessel for toothfish.”

He said that when Centurion del Atlantico is operating again next year, Estremar should have gross revenue of about $70m.

There’s also the opening to add to its hoki/southern blue whiting quotas.

“We used to have a bigger quota on the Centurion, but we have not been participating in the fishery, as we have been doing toothfish since 2014. There’s a lot of quota available in Argentina that isn’t being fished, and not many companies are going for southern blue whiting and hoki. We think we can operate the vessel for eight to nine months a year,” he said.

Undercurrent reported that surimi prices have crashed, with a 50% reduction on last year.

“We follow the reduction in surimi prices now, partly due to the price itself and partly the exchange rates in yen and dollars. It’s over a year until our product hits the market; it will be a different market then, and we have heard from producers the prices will recover. But, who knows, you never know what will happen in a year in this world,” said Eikrem.

 

Source: Undercurrent News.

LatAm’s seafood sector faces decreased investment amid political turmoil

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The Latin American seafood industry is encountering a period of “unprecedented uncertainty” as political transitions in key nations create a challenging environment for businesses, Ignacio Kleiman, managing partner of AntarcticaAdvisors, a corporate finance boutique, told UndercurrentNews.

“Argentina, in the midst of ongoing elections and substantial economic changes, is battling uncertainty spurred by drastic shifts and devaluation,” he added.

“Chile, once celebrated for its stability, now grapples with political unrest due to proposed legal and regulatory changes, making it arduous for businesses to devise long-term investment strategies. Peru is dealing with the ongoing El Nino phenomenon, intensifying pressure on local companies,” he also said.

Meanwhile, Ecuador, “previously stable and operationally growing,” finds itself entangled in political turmoil and rising insecurity, with imminent elections looming.

“The consequence of this political upheaval has created a dilemma for companies equipped with strong financial capabilities. Faced with unpredictable local conditions, many businesses are turning their gaze abroad,” he also toldUndercurrent.

This way, companies from Chile, Peru, or Ecuador are now seriously considering establishing footholds in the US or Europe instead.

“This shift is anticipated to significantly decelerate domestic investments, marking a fundamental change in the industry landscape,” he shared.

Additionally, Kleiman’s observations underscore another trend, with major players showing reduced interest in the Latin American sector despite its vast potential.

“While sporadic large transactions do occur, these investments represent only a fraction of the industry. They serve more as strategic maneuvers than substantial involvements,” he concluded.

 

Antarctica Advisors: ‘Perfect storm’ makes more seafood consolidation inevitable

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The corporate finance boutique’s Ignacio Kleiman said further consolidation is coming due to rising inflation and interest rates resulting in decreased consumption and increasing costs.

VIGO, Spain — With soaring inflation and higher interest rates, this food industry finds itself at a crossroads. In this turbulent market scenario, consumption in Europe, the US and other parts of the world has decreased while costs for producers and processors are climbing.

This “perfect storm” poses significant challenges to seafood businesses worldwide, potentially catalyzing a wave of consolidation within the industry; Ignacio Kleiman, managing partner of corporate finance boutique Antarctica Advisors, told Undercurrent News further consolidation was “inevitable.”

He explained that this consolidation arises from two key factors: the pressing need for companies to recapitalize due to excessive debt and the imperative to protect profit margins.

At the Conxemar seafood show, industry sources spoke about companies — either owned by private equity funds or family-owned –exploring the possibility of a sale.

Kleiman noted that companies that bought goods or services in dollars and sold them in euros faced increased costs that could significantly impact their expenses, making it difficult to pass inflated costs to customers in euros. He said this dilemma arises because the competitive economic landscape often restricts a company’s ability to raise prices without risking profitability.

“Companies burdened by high levels of debt are left with little choice but to seek capitalization, and others must consolidate to safeguard their profitability,” he told Undercurrent on the side of the Conxemarseafood exhibition last week.

Kleiman, who is based in Miami, US, stressed the impact of the high cost of capital in today’s financial landscape. He noted that the cost of money is currently elevated, leading to a shift in investment strategies among major players in the industry.

Unlike when “cheap money” has prompted spending, the present environment necessitates a “more selective” approach to investments. Kleiman believes that companies will carefully evaluate where they allocate their funds, considering the expensive nature of capital.

that thrived due to the availability of cheap capital. Thus, some have built significant inventories and engaged in distribution and trading but face higher costs in today’s financial climate.

Antarctica Advisors, based in Miami, plans to open an office in Europe soon to support clients in the region better. The boutique firm advised Peru’s Oceano Corp. earlier this year in the purchase of Sea FreshUSA.

Before the summer, talks for the purchase of seafood group NuevaPescanova by Canadian giant Cooke were put on hold due to the financial pressure experienced by the Spanish company. On Sept. 6, Pescanova formally communicated its intention to initiate a redundancy plan, known in Spain as Expediente de Regulacion deEmpleo, for as many as 100 staff. In 2022, the harder market situation encountered by the Spanish firm also halted the negotiations the group had previously held for the purchase of Argentinian fishing company Pesquera Veraz. Talks for a deal are yet to resume, although Cooke remains interested.

Meanwhile, Spain’s Grupo Iberica de Congelados (Iberconsa), owned by US fund Platinum Equity since March 2019, is soon to launch a refinancing plan for its considerable debt pile. Iberconsa was previously linked to Pescanova earlier in the process.

Atunlo, another prominent player in the Spanish tuna industry, has also reported a significant decline in sales during the last quarter, which has led to a cash flow issue the company aims to resolve in the coming weeks.

Another of Spain’s largest seafood processors, Fandicosta, has recently also been hit by cash flow issues. Its owner and president, AngelMartinez Varela, said he would be selling his firm to resolve those issues but then reportedly changed his plans for the sale and is looking for financial support from the Galician board (Xunta de Galicia) and banks.

Latin America

Kleiman told Undercurrent the Latin American seafood industry is encountering a period of “unprecedented uncertainty” as political transitions in key nations create a challenging environment for businesses.

“Argentina, amid ongoing elections and substantial economic changes, is battling uncertainty spurred by drastic shifts and devaluation,” he observed.

“Chile, once celebrated for its stability, now grapples with political unrest due to proposed legal and regulatory changes, making it arduous for businesses to devise long-term investment strategies. Peru is dealing with the ongoing El Nino phenomenon, intensifying pressure on local companies,” he also said.

Meanwhile, “previously stable and operationally growing” Ecuador is entangled in political turmoil and rising insecurity, with imminent elections looming.

“The consequence of this political upheaval has created a dilemma for companies with strong financial capabilities. Faced with unpredictable local conditions, many businesses are turning their gaze abroad,” he told Undercurrent.

Thus, companies from Chile, Peru, or Ecuador are now seriously considering establishing footholds in the US or Europe.

“This shift is anticipated to significantly decelerate domestic investments, marking a fundamental change in the industry landscape, “he shared.

Kleiman’s observations also underscored another trend, with significant players showing reduced interest in the Latin American sector despite its vast potential.

“While sporadic large transactions occur, these investments representonly a fraction of the industry. They serve more as strategic maneuversthan substantial involvements,” he concluded.

He foresees an acceleration of consolidation within the seafood industry. While the cost of capital may restrict some investment activities, it also presents opportunities for those seeking strategic acquisitions or partnerships.

 

Source: Undercurrent News