Antarctica Advisors: Cooke’s Copeinca acquisition will reshape Peruvian fishing landscape

With the acquisition of Copeinca, Cooke surpasses Tasato become the world’s largest producer of fishmeal and fish oil, according to Undercurrent News sources

Canadian seafood giant Cooke’s near-$1 billion acquisition of Peru’sCopeinca, announced on Thursday (Nov. 7), as reported by Undercurrent News, marks a significant shift in the global fishing industry.

The acquisition cements Cooke’s position as the world’s largest producer of fishmeal and fish oil, positioning it as a key supplier for aquaculture and global feed producers, overtaking Peru’s largest fishmeal producer, Tasa, several industry executives tell Undercurrent. Cooke also owns Omega Protein Corporation in the US.

In a telephone interview Friday (Nov. 8), Ignacio Kleiman, managing partner of Antarctica Advisors, a Miami, Florida-based financial advisory firm specializing in the seafood sector, emphasized this acquisition’s “strategic” importance. It connects “the northern hemisphere producer with the southern hemisphere producer,” he said.

Antarctica Advisors and Deutsche Bank are handling the Copeinca sale on behalf of the investment firms Davidson Kempner Capital Management and Monarch Alternative Capital, which took control of Copeinca’s then-parent CFG Investment in 2021. CFG was formerly part of the Hong Kong-based Ng family’s now-defunct Pacific Andes group empire, which began bankruptcy protection proceedings in 2016.

The magnitude of the deal can’t be overstated.

Copeinca, established in 1994, has grown to become Peru’s largest fishing company, with 2,770 employees, 45 vessels and eight processing plants spanning Peru’s north and center coastline. It holds the largest anchovy quota in Peru at 15.9% and processes approximately 21% of the country’s total catch for annual production of roughly 200,000 metric tons of fishmeal and 23,000t of fish oil, according to Cooke.

Meanwhile, Peru’s second anchovy season is underway. Between Nov.1 and Nov. 7, the fishing sector has already caught 248,199t, equivalent to 10% of the vast quota set by the country’s production ministry in late October, according to Undercurrent sources.

Meanwhile, the integration across hemispheres won’t just be geographic. It also provides stability to Copeinca, which has faced years of financial uncertainty, Kleiman said.

“This gives Copeinca a very bright future in the hands of Cooke,” he said. “It’s a great company with excellent management, and Cooke will ensure it has a stable and promising path forward.”

Cooke’s acquisition marks a significant leap in vertical integration for Cooke, Kleiman said. It allows the company to hedge fishmeal and fish oil prices, which are critical feed ingredients in its aquaculture operations.

“If you’re on both sides of the equation regarding fish feed pricing, you manage to stabilize your margins, creating a more resilient business model,” he noted.

By controlling an extensive supply chain share, Cooke can buffer price volatility, which benefits its financial stability in the aquaculture market.

A potential catalyst for change

Kleiman also highlighted that this acquisition could prompt broader changes within the Peruvian fishing sector, noting that the deal is”great for the industry as a whole.”

Copeinca’s entry into Cooke’s operations might attract additional strategic investors looking to consolidate or partner with local players, many of which have long sought foreign investment without success, he said.

“Some of Peru’s leading fishmeal companies have been open to deals for over a decade,” he noted without naming any firm in particular.

Cooke’s entry might spur other global players to follow suit, Kleiman said. The acquisition could set a precedent for foreign-led consolidation, reshaping Peru’s fishing industry by bringing in more external capital and expertise. Such developments could offer the Peruvian sector an opportunity for modernization.

“The announced acquisition by Cooke of Copeinca means a lot for the Peruvian industry and the country, in addition to what it means for the company itself,” agreed Peruvian fishing expert Pablo Trapunsky, former CEO of another fishmeal producer, Pesquera Diamante.

“After more than 10 years of the CFG take over [of] Copeinca by a hostile offer at the Oslo Stock Exchange, we finally reach the last chapter of this history. The Canadian seafood company Cooke steps into the Peruvian Fishing industry and will indeed change the whole game since the group also controls Omega Protein in the US, which also produces fishmeal and fish oil, same as Copeinca,” Trapunskywrote on LinkedIn.

Trapunsky also believes that this deal will “definitely change” the industry.

“Cooke is acquiring roughly 21-22% of the Peruvian fishmeal and oil production. But Peru accounts for roughly 25% of world production. So, it means about 5-6% of world production, and you have to add the products produced in the US by Omega Protein. That’s huge,” he wrote.

“And for the industry, it will mean regaining value as the products become more and more relevant, especially crude fish oil. We saw last year what happened there due to El Nino. We just wish all the best to Cooke on this adventure and also to all Copeinca’s workers, who can now focus 100% on their performance.”

El Nino’s minimal impact on deal viability

Peru’s anchovy harvest has been impacted by weather fluctuations over the last year, which caused the cancellation of the first anchovy season in 2023, but Kleiman downplayed the effect of recent El Nino events on this transaction.

“When El Nino hits, the fish don’t die: They move away,” he said.

This year’s anchovy season, which started strong after last year’s downturn, was a reminder of the industry’s resilience and ability to recover quickly, Kleiman said.

In his view, the Cooke team skillfully navigated the complexities of the Copeinca acquisition, dealing with financial and structural challenges that made the deal more intricate.

He declined to give Undercurrent additional details or discuss the agreed upon price. He only commented that “it was a very complex deal,” crediting Cooke’s diligence and Copeinca’s strong management.

 

SOURCE: Undercurrent News

Cooke to buy Copeinca in dealthat may be worth near-$1bn

Canadian seafood giant Cooke confirms it’s buyingCopeinca, one of the world’s largest fishmeal and fish oil producers and exporters

Canadian seafood giant Cooke has confirmed it is buying CorporacionPesquera Inca (Copeinca) of Peru, one of the world’s largest fish meal and fish oil producers and exporters.

Cooke and PF Cayman New Holdco have executed a binding share purchase agreement under which a wholly-owned subsidiary of Cooke will indirectly acquire all the outstanding shares of Copecina, Cooke’svice president of public relations, Joel Richardson, said in a press release on Thursday night (Nov. 7).

Cooke did not disclose the value of the deal. It is a private transaction, Richardson told Undercurrent News.

However, the deal could be worth close to $1.0 billion, considering Copeinca had earnings before interest, taxes, depreciation and amortization of around $130 million, sources told Undercurrent earlier this year.

Antarctica Advisors and Deutsche Bank are handling the Copeinca sale on behalf of the investment firms Davidson Kempner Capital Management and Monarch Alternative Capital, which took control of Copeinca’s then-parent CFG Investment — formerly part of the Hong Kong-based Ng family’s now-defunct Pacific Andes group empire — in2021 after a bankruptcy protection process started in 2016.

Parlevliet & Van der Plas, a family-owned corporation in the Netherlands, had also been rumored to be one of the bidders for Copeinca, sources told Undercurrent in July.

Recently, however, there was a clue that Cooke was closing in on a deal. In October, a company called Copeinca Canada was registered in the province of New Brunswick.

“There is tremendous compatibility between Cooke and Copeinca, and we’re excited to welcome Copeinca’s dedicated employees to the Cooke family of companies,” said Glenn Cooke, CEO of Cooke, in the press release.

“High-quality fishmeal and fish oil are essential animal and human nutritional ingredients. They ensure a safe and wholesome feed supply for the growth and care of animals in several farming groups, including aquaculture. We believe Copeinca will be a major contributor in furthering Cooke’s growth as a leader in strengthening global food security,” Cooke added.

Copeinca, established in 1994, has grown to become Peru’s largest fishing company with 2,770 employees, 45 vessels and eight processing plants that span the north and center coastline of Peru.

The company holds the largest anchoveta (Enaraulis ringens) quota in Peru, at 15.9%, and processes approximately 21% of the country’s total catch, producing approximately 200,000 metric tons of fishmeal and 23,000 t of fish oil annually.

“Cooke’s strategic agility and vertically integrated operations will enable Copeinca to remain competitive in an evolving global export market,” said Jose Miguel Tirado, CEO of Copeinca, in the joint press release.

“Our Peruvian company is thrilled to join the Cooke family of companies. Peru and Canada have a very strong and growing trade and investment relationship thanks to active collaboration between governments under the Canada-Peru Free Trade Agreement.”

Cooke entered the marine ingredients sector in 2017 by acquiring US-based Omega Protein Corporation, a nutritional product company and a leading integrated provider of specialty oils and protein products.

Peru is Canada’s second-largest export market in Central and South America and its fourth-most important export market worldwide.

The deal is expected to close before the end of November.

 

SOURCE Undercurrent News

Seafood M&As are picking up speed. Here are the top deals so far this year

Global economic upheaval has not put a dampener on seafood industry consolidation this year.

The seafood processing, aquaculture, fisheries and aquatech sectors have shown a surprising amount of merger and acquisition (M&A) activity so far in 2024, reflecting both investor enthusiasm and the ongoing need for consolidation.

Deals slowed in 2023 from the year prior. An IntraFish tally showed 77 acquisitions, mergers and significant investment stakes in 2023 — a 7 percent decline over 2022. However, based on the pace so far in 2024, it is conceivable that this year will reach that level, if not higher.

IntraFish on reported over 60 mergers, acquisitions or substantial stake sales through the first nine months of the year.

Ignacio Kleiman, principal at Antarctica Advisors, a boutique seafood advisory group, told IntraFish that this year shows the appetite for some industry players to continue much-needed consolidation on the processing and distribution side in particular.

“It’s been a year of consolidation,” he said. “It’s been a year with larger deals that were more prominent, as opposed to a whole bunch of small deals last year.”

Kleiman noted that some of the larger players with “more imagination” took advantage of supply chain inefficiencies. Japanese giants were among the deal-makers this year, as were Canadian group Cooke, Norwegian firms SalMar, Nergard and Pelagia, and biopharma behemoth MSD.

Kleiman said the recent rate cut by the US Federal Reserve, though it may not have an immediate impact, is building confidence among owners that may have been reluctant to start discussions.

The fourth quarter is also a notorious period for inking deals, so it’s inevitable that the industry will see more come through, according to Kleiman. Though he expects to see consolidation in processing and distribution in particular, the fragmentation across the industry means there are many more deals to come across the entire value chain.

“There has to be more integration and more consolidation…just because that’s a way of capturing more margin and generating a substantial level of synergies,” Kleiman said.

One sector that should be more acquisitive than it has been, given its size and strength, is the Norwegian salmon farming sector, he said.

“They continue to do exactly the same thing they were doing 10 years ago, as opposed to looking for a way of diversifying into other species.”

Anne Hvistendahl, global head of seafood at DNB, the world’s largest lender to the seafood industry, said the Norwegian salmon industry has plenty of consolidation to tackle in its own backyard, with around 80 salmon farmers in Norway.

“Things will happen, and we have mandates in that direction,” Hvistendahl told IntraFish. “You have generational change, so over time there will be fewer players in Norway and in Chile.”
Both in Norway and across borders, the industry can expect to see more deals come to fruition in the salmon sector, but if owners are happy with their operations, it’s difficult to convince them to think about consolidation, Hvistendahl said.

Dag Sletmo, senior advisor for DNB Seafood, put it bluntly: “Everybody wants to buy, and nobody wants to sell.”

Listen to our full conversation with Kleiman on the most recent episode of the IntraFish Podcast, and follow us on Apple and Spotify to hear our upcoming\ conversation with Hvistendahl and Sletmo.

Listen the PODCAST here.

Antarctica Advisors Acts as Exclusive Investment Banking Advisor to Central Seaway Company Inc. in the Sale to Captain Fresh

February 29, 2024Antarctica Advisors LLC, the leading Seafood Industry-Focused M&A advisory firm, acted as the exclusive investment banking advisor to Central Seaway Company Inc. (“CenSea”) in the sale to Captain Fresh, an India based multi-species multi-origin seafood player.

Established in 1960, CenSea is widely recognized as a market leader in frozen seafood distribution in the U.S. serving major clients in both foodservice and retail markets. With revenues exceeding $350 million, this acquisition provides Captain Fresh with a strong foothold in the U.S. seafood market and represents Captain Fresh’s first significant investment in the U.S. seafood distribution sector.

Antarctica’s specialized Seafood M&A Team provided CenSea with full-fledged M&A advisory services by marketing the opportunity, identifying the buyer, and structuring and negotiating the transaction towards a successful completion.

We are extremely proud of what CenSea has accomplished as a family-owned enterprise. We now move forward with a united team and a common goal to continue building and growing an industry-leading company. Antarctica’s transaction team was instrumental in bringing this complex cross-border transaction together by leveraging their knowledge and experience in the seafood industry.” said Nate Torch and Jeff Stern, Co-Presidents at CenSea

CenSea is one of the most reputable brands in the Seafood Industry and recognized as an industry leader in the U.S.  This highly strategic transaction will unlock global growth potential for the future of CenSea and Captain Fresh. Our specialized Seafood M&A Team worked closely with both management and shareholders throughout the process in bringing this transaction to a successful completion.” commented Birgir Brynjolfsson, Partner at Antarctica Advisors

Antarctica Advisors LLC is a U.S.-based, independent investment banking firm providing clients in the global Seafood Industry with specialized domestic and cross-border, industry-focused M&A advisory as well as private equity and debt capital raising services.

For media inquiries, please contact Info@AntarcticaLLC.com or visit www.AntarcticaLLC.com

Will 2024 be a better year for seafood M&A deals? See what the experts have to say

This 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.

“I think that the outlook is positive. Last year was a little slower because we were digesting higher interest rates and some volatility in Ukraine and all of that. But I think all of that has been digested already. Besides that, there was volatility in different sectors of seafood, in shrimp, in salmon, in snow crab still, and lobster. It was a pretty difficult year in general.”

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.

“There is more stuff popping up. I think people have an expectation that eventually interest rates are going to startcoming down, inflation is coming down, earnings and profitability is stabilizing,” Kleiman said.

“The understanding and the expectation is that we are on the other side of this curve, and earnings and the cost ofmoney is and will continue to stabilize. I think that is favorable winds for a pick up in M&A activity, ” Kleiman said.

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

India’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

VG-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.

“We stand at a transformative juncture in our aim to establish Captian Fresh on the global stage,” said Gowda in a statement from September.

“Over the past three years, we’ve built significant supply­side capacity by establishing a robust network connecting us directly to Indian coastal fishermen and farmers. This is in addition to developing deep partnerships with more than a dozen export-focused factories.”

He added: “Although we handle over 80,000t of seafood annually, it’s merely scratching the surface of our potential. Our platform is primed to optimize every investment dollar, especially in high-margin markets like Europe and the US.” Captain Fresh offers a diverse product range, encompassing over 100 varieties of fish and seafood, with a presence in more than 30 countries worldwide, the company said at the time.

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

The 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

It’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.

“If you are presented with a have-to-have transaction, you are going to find a way to do it. If you are presented with anice-to-have transaction, you may do it or you may decide to postpone it a bit.”

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.

“Transactions are getting done. I think that buyers are being a little bit more disciplined on how they put the transactions together and what transactions are getting done because the cost of capital is forcing them to pursue transactions that have a fairly higher level of synergies in order to recoup some of that more expensive capital that they are using,” said Kleiman, who spoke on the changing nature of the seafood industry at a recent seafood industry forum in New Bedford, Massachusetts.

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.

“It requires a little bit more creativity with buyers, a little more flexibility on both the seller and the buyer side.”

“Today, more than ever, you need an investment banker to help those transactions happening,” Kleiman said.

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.

“In terms of international players, I think the Europeans are a little more aggressive than the Asians, that’s why you see more movement on the east coast,” 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.

For Premium Brands the acquisition was a must-have deal. “Everyone decided to chug along,” Kleiman said.

___

Source: Intrafish

LatAm’s seafood sector faces decreased investment amid political turmoil

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.