November 20, 2017

Canada’s largest single-profession pension fund, the C$180.5 billion Ontario Teachers Pension Plan (Ontario Teachers), announced it has made its first investment in aquaculture, acquiring Atlantic Aqua Farms from San Francisco-based Encore Consumer Capital for an undisclosed amount.

Founded on Prince Edward Island (PEI), Canada, more than 25 years ago, Atlantic Aqua Farms has grown to be the largest grower of live mussels in North America, which the company sells under the brands of Canadian Cove, Confederation Cove, and J.P.’s Shellfish. The company also is a major provider of branded oysters, clams, and lobster from Maine and Canada.

“The team at Atlantic Aqua Farms is very excited to be part of the Ontario Teachers’ global portfolio of companies and honored to be their first seafood acquisition,” said Terry Ennis, CEO of Atlantic Aqua Farms.

This deal, which is reportedly valued in excess of C$100 million, represents the first foray into aquaculture for the pension fund, which states that the acquisition falls under its “…natural resources mandate to invest in the global food basket, with an eye on sustainable sources of food production,” according to a released statement.

“Demand for protein is increasing, and in the context of land constraints and environmental considerations, aquaculture is among the most sustainable sources to meet this demand,” said Andrew Claerhout, senior managing director, Infrastructure and Natural Resources. “Atlantic Aqua Farms has built a significant aquaculture platform, underscoring the significant opportunities for long-term growth in this space.”

The building out of its platform includes the acquisition of three mussel farming companies in December 2015 – J.P.’s Shellfish of Maine, Confederation Cove Mussels, and Stewart Mussel Farm, which brought Atlantic Aqua Farms’ sales to approximately C$100 million, and earnings before interest, tax, depreciation, and amortization (EBITDA) to C$15 million.

Kevin Murphy, managing director of Encore Consumer Capital, commented, “We have thoroughly enjoyed our time partnering with AAF and are proud of the accomplishments that the company has made during this time under the leadership of Terry Ennis and his team. AAF is poised to continue to flourish under its new owners, Ontario Teachers’, and we look forward to watching as the company becomes an even more important player in the sustainably grown and harvested shellfish category.”

Bivalves are Best

Growth in global demand for seafood has increased at 3.2 percent per year since 1960, outpacing the 1 percent annual growth in global population, according to Philippe de Lapérouse, c0-head and managing director with HighQuest Consulting. Over the same time period, per capita consumption has more than doubled from 10 kilograms per person to more than 20 kilograms per person today, driven by demand from Asian markets where seafood has historically been a cornerstone of the regional diet, and by consumers in developed markets who are looking to include more healthier protein in their diets.

Due to overfishing and the depletion of wild-caught fish stocks, aquaculture is increasingly being seen as the source for this protein, however, aquaculture systems for the production of finfish have been challenged by ecological concerns and unsustainability. To combat this, an article in the January 2017 issue of the journal, Solutions, states that investors, government bodies, and industry should increase their focus on the production of farmed bivalves, or mussels, oysters, and clams.

Bivalves are the most sustainable and ecological sound option for farmed seafood production; having virtually no concerns for welfare while in captivity, and because they are filter feeders, they require no feedstock – two factors that combined with population growth and demand trends, reflect the potential for long-term, sustainable output along with long term return on investment.

“…we’d certainly like to continue to grow our business and [Ontario} Teachers are very interested in investing for the long-term,” Ennis told CBC News. “When they see a business that they like that meets their mandate, they like to hold it for the long-term and they’re talking how do we strategically grow and strengthen the business for the next hundred years.”

-Lynda Kiernan