Investment Funds Target Sustainable Aquaculture

(3BL Media/Justmeans) – The U.S. imports more than 90 percent of its seafood. This supply is becoming increasingly constrained as global demand is on the rise and wild-caught production is declining. According to the World Bank, aquaculture will supply two-thirds of global fish consumption by 2030. This is the lucrative area where private equity and venture capital funds are keen to finance innovative fish-farming enterprises.                                                          

A number of dedicated funds are targeting sustainable aquaculture investments to diversify their portfolios. Even some public equity investors are looking at oceans-related investment strategies. For instance, Rockefeller & Co. is betting that increased regulation around ocean health will improve the value of sustainability-based ocean assets.

Amy Novogratz, managing director of Aqua-Spark, a Dutch-based fund, said that the whole spectrum of investors have been approaching them with funds. Aqua-Spark has invested in Chicoa, Mozambique fish-farming operation, and Calysta, a California biotech company that uses microbes to produce a fishmeal substitute.

Joe Hankins, director of the Freshwater Institute, a project of the nonprofit Conservation Fund, said that the land-based aquaculture model is more predictable and cost-competitive. When sustainability and a lower carbon footprint are added to it, it could be attractive to investors. The Conservation Fund is in the early stages of creating a dedicated fund to invest in land-based aquaculture assets, from the supply chain to production to distribution.

Mitchell Lench, founder of Treetops Capital in Cape Elizabeth, Maine is planning to launch a sustainable seafood fund later this year. Lench says he has found interest among high-net-worth individuals, family offices, foundations and impact investors in a fund targeting the broader seafood value chain.

Larger funds are eyeing the market as well. The anticipated growth in the aquaculture supply chain helped Pontos Aqua Holdings LLC, based in New York raise $75 million last year for investments in raw materials, equipment and services, animal health and feeds. Pontos seeks to invest between $5 million and $75 million.

Wheatsheaf Investments Ltd., set up by the Grosvenor Estate, a wealthy UK family, invested $5 million in Enterra Feed Corp. in 2014, to scale up the company's production of fish and livestock feed based on larvae of the black soldier fly. Wheatsheaf last year also led a $12.6 million round of equity financing for San Francisco-based BluWrap, which has developed technology to regulate the oxygen exposure of perishable proteins.

BluWrap's earlier investors, who also participated in the latest round, are also playing the growing global demand for food. Anterra Capital, based in Amsterdam, invests in companies commercializing technology around inputs such as feed and nutrients, "precision farming," logistics and consumer safety. The fund was spun out in 2013 from Rabo Ventures, the food and agriculture venture capital fund of the leading Dutch bank, Rabobank.

BluWrap is the only seafood-industry investment of Firelake Capital, an early-stage Silicon Valley investor that is betting on the growing demand for higher-quality products and services from the emerging global middle class.

Paine & Partners, which last year closed on $893 million in financing for its fourth fund, has two fish-related investments in its Fund III portfolio. Paine does not specifically apply a sustainability lens, but sees such practices as simply good business.

Source: Huffington Post

Image Credit: Flickr via nkidia