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.
Will 2024 be a better year for seafood M&A deals? See what the experts have to say
/in NewsThis year is set to be a better year partly amid improved stock market sentiment, financial executives told IntraFish.
The seafood industry could see more mergers and acquisitions in 2024, although deals may be smaller and driven by the technology and artificial intelligence sectors, according to those in the M&A business.
There were fewer M&A deals last year, despite the fact the seafood sector did not suffer as significant a fall as several other sectors.
Ignacio Kleiman, managing partner at investment banking firm Antarctica Advisors, said he expects 2024 to be a better year amid improved sentiment towards the stock market and an expectation of easing interest rates.
In spite of this, a number of transactions did happen. An IntraFish analysis shows 77 acquisitions and investments were completed during 2023, down more than 7 percent from 2022’s 83, but 18.5 percent higher than the reported 65 deals during 2021.
Antarctica itself closed the sale of Seafresh to Oceana of Peru and the Continental Grain Company (Conti), Organizacion Cultiba SAB de CV (Cultiba), Equity Group Investments (EGI), and Castle Harlan investment in Mexico-based tuna rancher Baja Aqua Farms, in addition to a number of unreported private deals.
Given the trend for seafood industry consolidation and the drive for companies to become more efficient, deals of all sizes in different sectors and countries are likely in his view.
“Last year, people were pretty focused on improving their operations, so they were inwardly focused. This year, we are going back to a more normal environment where people are also looking for acquisition opportunities to grow.”
John Doucette, executive vice president and head of commercial lending for US-based M&T Bank, said he expects M&A levels to be similar to those of 2023.
“There is certainly M&A activity that is out there. I think that trend is still going to continue. Values might come down a bit given the interest rates.”
In a difficult climate, banks want to see steady cash flow and, where possible, upswings in this metric before lending, the executive said.
“You are going to see more private equity or family office [involvement]. There are going to be some mergers where there is not going to be as much cash.”
Doucette expects to see lower deal valuations, especially in the US Northeast where the industry is more fragmented.
Interest rate reductions expected to begin in mid-2024 could also help propel the number of M&As in Doucette’sview. “That’s certainly going to make it easier to digest,” he said.
Tech and equipment are sexy
Seafood Corporate Advisors Partner Jorgen Horntvedt said seafood M&A in 2024 will be all about technology and equipment, with tech providers really relevant in terms of decreasing environmental footprints and collecting utilizing data to enable more informed real-time decisions and improving efficiency.
“Utilizing byproducts will provide further consolidation opportunities for larger ingredient companies. Overall, the ongoing consolidation across the equipment supplier segment is expected to continue,” Horntvedt said.
For Hakon Berg, CEO at Norway-based investment group Skeie Teknologi, there is likely to be a fair amount of M&A activity across the digital seafood space in 2024 because of a growing need for data and precise measuring.
There is a significant number of these companies in the space and many of them are looking for cash, and as they become more mature businesses they are becoming more attractive targets, he added.
The prognosis is less clear for Norwegian salmon farmers, who were hit last year with a new 25 percent tax, known as the ground rent tax, on their sea-based farming operations.
“In Norway, the aquaculture tax could lower M&A volumes due to market uncertainty, but the market could also see a heightened focus on consolidation amongst farmers,” Berg said.
“I think we could see a growth in trade sales of smaller farmers due to the tax situation in Norway and the overall economies of scale in the industry.”
SOURCE: The Wave
India’s Captain Fresh in $50m fundraise to complete deal for US shrimp importer
/in NewsIndia’s Captain Fresh is in talks to raise a further $50m from investors as part of the financing for the planned acquisition of US shrimp importer CenSea
India’s Captain Fresh is in talks to raise a further $50 million from investors as part of the financing for the planned acquisition of US shrimp importer, with a deal for a European salmon processor set to follow later in the year, sources told Undercurrent News. As Tech Crunch reported the plans to raise the $50m, Undercurrent sources said the deal talks to buy $300mturnover US shrimp importer Central Seaway Co. (CenSea) are very advanced.
“It sounds like the deal [for CenSea] is close. I’d say weeks away,” one source, who asked not to be named, told Undercurrent. Two more sources with knowledge of the talks confirmed the situation. It’s likely the deal will close before Seafood Expo North America, which takes place in Boston, Massachusetts, March 10-12, they said. CenSea’s management team, led by Joe Rosenberg, Jeff Stern and Nate Torch, declined to comment to Undercurrent. Utham Gowda, CEO and founder of Captain Fresh, which has 80,000 metric tons of seafood going through its Indian platform, did not respond to a request for comment.
Executives with Antarctica Advisors, which is running the sale process for CenSea, also did not respond to a request for comment.
According to Tech Crunch, Captain Fresh is in the “advanced stages” of raising $50m from Nekkanti Sea Foods and venture capital firms SBI Investment, Evolvence, Tiger Global, and Prosus Ventures. Nekkanti, one of India’s largest shrimp processors, led an extended Series C fundraising with $6m, Startup Story reported in January.
The extended Series C is also mentioned by Tech Crunch, which reported it was $15m in total. Prior to the new $50m funding, Captain Fresh had raised over $100m and was valued at $500m in its previous round.
Nekkanti was one of Captain Fresh’s first investors. Captain Fresh CEO Gowda worked for Nekkanti from 2018-2019 as the shrimp processor looked at an initial public offering. He previously worked in banking.
EU salmon deal
Captain Fresh’s planned deal for Polish smoked and fresh salmon processor Koral, which is majority owned by private equity (PE) Abris Capital Partners, is still underway and expected to close later in the year. Koral is the remaining asset left in the PE-backed Graal group after the sale of the company’s canned fish and ready meal assets to German food giant Unternehmensgruppe Theo Muller earlier in 2023, a deal first reported by Undercurrent.
It’s thought this deal is on track, but the aim is to close later in the year.
The Koral plant, which produces fresh, smoked and marinated salmon and whitefish under brands like Super Fish as well as private label, is 22,000 square meters in size.
According to the Graal website, the plant in Kukinia, in the northeast of Poland, has 23 production lines for fresh, cold and hot smoked and marinated fish. The company can process 100t of raw material daily, with salmon and trout, halibut, seabass and tuna as its main species.
As well as smoked products, Koral can produce fresh fish in skin packs and modified atmosphere packaging. Over 500 are employed in the plant, the website states.
Antarctica Advisors is also running the sale process for Koral, having also worked on the sale of Graal’s canned fish and ready-meal assets to Muller.
Captain Fresh has hired Spanish executive Basola Valles to lead the European business as part of his expansion plan. Valles, who worked on Amazon’s European launch and has held top positions with other corporates, has since hired Luz Benitez Povedano as senior commercial director for the EU.
Povedano, who previously worked for France Telecom, Groupon, and JustEat Takeaway, joined the team in
SOURCE: Undercurrent News
India’s Captain Fresh in talks to buy EU salmon processor, US shrimp deal still in works
/in NewsVG-funded Indian seafood player Captain Fresh is closing in on the acquisition of a European salmon processing plant while still negotiating a deal for a US shrimp importer, sources say.
Venture capital (VC) funded Indian seafood player Captain Fresh is closing in on the acquisition of a European salmon processing plant while still negotiating a deal for US shrimp importer Central Seaway Co. (CenSea), sources told Undercurrent News. Captain Fresh, valued at $500 million in a 2022 VC fundraising round, is in talks to buy Polish smoked and fresh salmon processor Koral, which is majority-owned by private equity (PE) Abris Capital Partners, sources said.
Koral is the remaining asset left in the PE-backed Graal group after the sale of the company’s canned fish and ready meal assets to German food giant Untemehmensgruppe Theo Muller earlier in 2023, a deal first reported by Undercurrent.
Wojciech Jezierski, senior partner with Abris, declined to comment to Undercurrent. Boguslaw Kowalski, the former CEO of Graal who exited at the point of sale to Muller, did not respond. The Koral plant, which produces fresh, smoked and marinated salmon and whitefish under brands like Super Fish as well as private label, is 22,000 square meters in size. According to the Graal website, the plant in Kukinia, in the northeast of Poland, has 23 production lines for fresh, cold and hot smoked and marinated fish. The company can process 100 metric tons of raw material daily, with salmon and trout, halibut, seabass, and tuna as its main species.
As well as smoked products, Koral can produce fresh fish in skin-packs and modified atmosphere packaging. Over 500 are employed in the plant, the website states. Utham Gowda, the CEO and founder of Captain Fresh, who discussed the company’s desire to expand in Europe and the US with Undercurrent earlier this year, declined to comment on the Koral talks.
Gowda has hired Spanish executive Basola Valles to lead the European business as part of his expansion plan. Valles, who worked on Amazon’s European launch and has held top positions with other corporates, did not respond to a request for comment. US-based boutique advisory firm Antarctica Advisors, which is running Koral’s sales process, declined to comment. Antarctica also ran the process for the other Graal assets to Muller. Antarctica is also running the sale process of US shrimp importer and frozen seafood supplier CenSea, which Undercurrent revealed Captain Fresh is also in discussion to buy. It’s understood these talks are continuing.
Executives with CenSea were not immediately available for comment.
Who is Captain Fresh?
Gowda’s Captain Fresh is one of several Asian companies seeking to bring technological advancement to the seafood sector, with another being Indonesia’s eFishery. In September, Captain Fresh announced a $20m capital boost as part of an ongoing funding round for global expansion. The investment was led by Japan-based SBI Investment and Evolvence Capital, with continued support from internal investors such as Accel, Matrix Partners India, Prosus Ventures and Tiger Global, among others, the company said at the time. With a particular focus on penetrating the European and US markets, the company is already engaged in discussions with potential allies there, it said.
The company has also been inking supply deals with plants in the rest of Asia after becoming its home country’s largest seafood factory operator, the company’s founder previously told Undercurrent.
He said that Captain Fresh has signed supply deals with plants in Indonesia, the Philippines, Sri Lanka, and Vietnam after growing its domestic footprint.
Source: Undercurrent News
Investors snap up Mexican bluefin tuna ranching giant Baja Aqua Farms
/in NewsThe investor group includes: Equity Group Investments, a firm founded by late US billionaire Sam Zell; CastleHarlan, another private equity; Mexican beverage bottler Organizacion Cultiba SAB de CV; and Continental GrainCompany from the agribusiness sector.
A group of prominent investors has acquired Baja Aqua Farms (BAF), one of the world’s leading vertically integrated bluefin tuna ranching companies.
The investor group is comprised of US private equity firm EquityGroup Investments, founded by the late US billionaire Sam Zell; Mexican beverage bottler Organizacion Cultiba SAB de CV; agribusiness company Continental Grain Company; and private equity firm Castle Harlan.
While full financial details were not disclosed, Cultiba contributed around $40 million for a minority stake in BAF, according to a transaction filing seen by Undercurrent News. As part of the deal, representatives from each investing company will join BAF’s board of directors.
Antarctica Advisors served as the exclusive sell-side advisor to BAF on the deal, led by Birgir Brynjolfsson.
In a statement, BAF CEO Manuel Vazquez said the consortium’s”combined operational expertise will be a major asset in driving the growth and expansion of our business going forward.”
BAF operates tuna ranching facilities in Mexico’s Baja California, from where it supplies sashimi-grade bluefin to high-end restaurants and retailers worldwide.
Source: Undercurrent News
Seafood M&As are changing – Here’s how
/in NewsIt’s not only the rate of M&A’s that has slowed in seafood but the shape and structure of deals too.
M&A deals in the seafood industry are being reshaped by current economic factors that are impacting both the rate of dealmaking and how deals are structured.
The rate of M&As in the seafood industry is expected to be hindered by the difficulties in raising financing, said John Doucette, executive vice president and head of commercial lending for US-based M&T Bank.
“I think it’s going to be at a lesser pace just given the cost of money now,” Doucette told IntraFish.
A recent IntraFish report forecasted the number of global seafood M&A’s this year is likely to fall short of 2022 levels.
While international companies have been showing interest in moving in on US acquisitions, particularly in the then-northeast corner of the United States where the seafood industry is more fragmented, Doucette said commercial interest rates play much more into executives’ thinking.
“It’s just tough with the prime rate at 8.5 percent, and although (the US Federal Reserve) didn’t raise it the other day they certainly didn’t give any indication that they are going to reduce rates anytime soon either. It’s going to rely on more self-financing too,”
Must have?
The higher cost of capital is also making buyers more cautious, leading to the postponement of deals considered less strategic, Ignacio Kleiman, managing partner at investment banking firm Antarctica Advisors said.
Acquisitions generally fall into two categories “must have” and “nice to have,” Kleiman said.
While there is still a good volume of M&A activity, in part helped by pent-up demand left over from the COVID-19 pandemic, deals that are going ahead are seeing a greater use of earnouts and seller financing arrangements.
Earnouts are a pricing structure in which the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition.
Seller financing is an arrangement in which the seller handles the mortgage process instead of a financial institution. Instead of applying for a conventional bank mortgage, the buyer signs a mortgage with the seller.
The event, which drew 60 seafood business leaders, was organized by M&T Bank, which operates over 1,000 branches in 12 US states, and accounting firm Citrin Cooperman, with the support of investment banking group Antarctica Advisors.
The forum was targeted at key seafood players in the New Bedford and the wider New England community to exchange ideas on current events affecting the sector. It’s hoped the forum might become an annual or biannual event.
Be creative
Where previously companies may have worked with a commercial bank and ended up signing a single check to make an acquisition, these days buyers and sellers need to be a bit more creative in how a deal is structured.
Companies may opt not to sell all of their shares in the business, retaining a minority and rolling over some of their equity, exiting perhaps three to five years later.
The northeast corner of the United States with its proliferation of $100 million to $400 million (€93 million €372million) seafood companies is proving attractive to those on the lookout for acquisitions including overseas investors, offering them more manageable deal sizes and boosting the likelihood of consolidation, Kleiman said.
On the West Coast there are few processors, and in the Alaska-Seattle corner of northwest United States companies are frequently very large or very small, with little in between, he noted.
Even in the most challenging times, deals can be done, however, said Kleiman.
Despite the difficulties presented by COVID lockdowns, Antarctic Advisors still managed to close its biggest-ever deal in January 2021 when Premium Brands Holdings and a coalition of Mi’kmaq First Nations completed the acquisition of Canadian shellfish harvesting and processing giant Clearwater Seafood.
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Source: Intrafish
Norway-backed Argentine white fish firm seeks investor ‘partner’ to finance M&A in new species
/in NewsNorway’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.
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
/in NewsThe 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.
This way, companies from Chile, Peru, or Ecuador are now seriously considering establishing footholds in the US or Europe instead.
Additionally, Kleiman’s observations underscore another trend, with major players showing reduced interest in the Latin American sector despite its vast potential.
Antarctica Advisors: ‘Perfect storm’ makes more seafood consolidation inevitable
/in NewsThe 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.
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.
Meanwhile, “previously stable and operationally growing” Ecuador is entangled in political turmoil and rising insecurity, with imminent elections looming.
Thus, companies from Chile, Peru, or Ecuador are now seriously considering establishing footholds in the US or Europe.
Kleiman’s observations also underscored another trend, with significant players showing reduced interest in the Latin American sector despite its vast potential.
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
Antarctica Advisors Acts as Exclusive Investment Banking Advisor to Sea Fresh USA in its 100% Sale to Oceano Seafood
/in Announcement, NewsSeptember 26, 2023 – Antarctica Advisors LLC, the leading Seafood Industry-focused M&A advisory firm, acted as the exclusive investment banking advisor to Sea Fresh USA (“Sea Fresh”), one of the largest processors of fresh, premium-quality, wild-caught Loligo Squid in the U.S., in its sale to Oceano Seafood (“Oceano”), an international fishing and processing conglomerate from Lima, Peru.
Founded in 1981, Sea Fresh USA is a fully integrated seafood business with fishing, unloading, processing & packing operations. Sea Fresh has docking operations in Galilee, RI (Handrigan Seafoods) and a BRC-certified processing facility in North Kingstown, RI. The company is well known for its fresh and frozen Squid products distributed through retail and food service.
James Fox, Owner of Sea Fresh, commented: “Oceano has been a customer of ours for several years and we are excited to be their first acquisition in the U.S. market. We are thankful to have worked with the Antarctica Advisors team who played a key role in helping us navigate this complex transaction process. Their senior banker M&A advice was critical to the structuring and negotiating the best possible transaction for me and my employees.”
For Oceano, the acquisition of Sea Fresh expands its international footprint while deepening its supplier network and presents numerous synergies facilitating growth including diversifying its product offerings with access to the U.S. market.
Antarctica Advisors is the leading US-based, independent investment banking firm providing corporate clients in the global Seafood Industry with specialized M&A advisory, private equity and debt capital raising services. The firm’s highly specialized Seafood Team is comprised of professionals with significant knowledge of the Seafood Industry, as well as a proven track record of successful transaction execution.
Antarctica Advisors LLC is a licensed broker-dealer, member of FINRA and SIPC.
For further information contact Ignacio Kleiman, Antarctica Advisors LLC at:
IKleiman@AntarcticaLLC.com or visit www.AntarcticaLLC.com
$400m Peruvian group snaps up US squid supplier
/in NewsA Peruvian seafood group with an annual turnover of more than $400m has inked a deal for one of the major players in the US squid sector
A Peruvian seafood group with an annual turnover of more than $400 million has acquired one of the most prominent players in the US squid sector, sources told Undercurrent News. Peru’s Oceano Corp., which snapped up Spanish cephalopod supplier Pesfasa from bankruptcy earlier this year, has acquired Rhode Island-based Sea Fresh U.S.A., sources said.
Sea Fresh owns and operates its vessels and an unloading dock in Galilee, a fishing village on Point Judith within the town of Narragansett, on the southern end of the state. It also owns a British Retail Consortium-approved processing plant in nearby North Kingstown, according to the company website.
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