Benchmark Holdings, a pioneering bioagtech company operating in the aquaculture, agriculture, and animal health sectors, has raised £19 million (US$25.4 million) to fund a newly announced joint venture with Empresas AquaChile, the sixth largest salmon producer in the world.
The Chile-based joint venture, which will be named Benchmark Genetics Chile, will combine cutting-edge salmon genetics technology and genomics to produce salmon eggs in the Chaicas high-quality biosecure land-based facilities in Chile, according to an announcement by Benchmark. These operations will be conducted with back-up from Benchmark Genetic’s land-based breeding operations in Iceland and genetic technology from Benchmark’s Akvaforsk Genetics in Norway. The salmon eggs produced through the venture will fully supply AquaChile’s Atlantic salmon egg requirements as well as the requirements of other customers. The company also plans to market Coho Salmon and Rainbow Trout eggs that have been bred to thrive in Chilean conditions.
“We are very pleased to announce today’s Chilean joint venture; combining AquaChile’s existing high quality land-based production and locally adapted genetics business with Benchmark’s leadership in salmon genetics and long-standing research in the field. Together, we believe we will create a world class operation in Chile,” said Malcolm Pye, CEO, Benchmark.
Financing
To fund this endeavor, Benchmark has undertaken a placement with existing and new investors alike to raise £19 million (US$25.4 million) to fund a buy-in of £12.2m (US$16.25) for a 49 percent stake in the joint company; a £4m (US$5.4 million) loan to the venture, and additional transaction expenses and working capital needs.
In the first four months to September 30 2018, Benchmark management expects the venture to post earnings before interest, tax, depreciation, and amortization (EBITDA) of £1.81m (US$2.4 million). By September 30, 2019 expectations are that the company will see EBITDA of £2.4m (US$3.2 million), and when at full capacity, EBITDA of £4.1m (US$5.5 million).
Benchmark states that this joint venture will de-risk its growth strategy in Chile, the second largest salmon market in the world, and one where Benchmark is underrepresented, according to Pye.
Raising capital in such a manner to fund joint ventures is a repeat process for Benchmark. In the summer of 2016 the company announced it had raised £30.7 million (US$40.1 million) through the placing of 42.3 million shares at 65 pence each to finance two joint ventures within the fishery sector and a biotech acquisition.
The first joint venture was a tie-up with Salten Stamfisk AS for the construction of a combined land and sea-based operation in Norway to produce 150 million biosecure salmon eggs on a year-round basis, raising Benchmark’s output by 37.5 percent.
The second joint venture was a partnership with an unnamed salmon producer through which Benchmark will provide outsourced breeding and genetics services. Benchmark’s investment in the project was set at £2.2 million (US$2.88 million) in exchange for a 50 percent stake in the business which was scheduled to begin operations before the end of 2016, reported Morningstar.
At the time, Benchmark also expanded into a new aquaculture species through the acquisition of specified pathogen resistant (SPR) breeding and genetics assets and intellectual property in the shrimp sector for £3.5 million (US$4.6 million). The deal was forged with an unnamed Latin American company that was reported to have “an established genetics programme [sic] and broodstock, and a highly regarded genetics team.”
Chile is Hot
Benchmark is not the only company making moves to secure a strong position in the Chilean salmon market. The country has seen a spate of transactions recently, with nearly $500 million in deals announced within a week’s time earlier this month.
On June 4, GAI News reported that AquaChile, the top salmon company in the country, had signed a deal to acquire Salmones Magallanes and Pesquera Eden for $255 million. The transaction will give AquaChile a foothold in the salmon farming sector in the southern Magallanes region of the country, a cold-water location known for being ideal for raising salmon.
Additionally, Agrosuper, the parent company of Los Fiordos, bested a field of rival bidders including AquaChile, Blumar, Los Fiordos, Australis Seafood, and Invermar, to acquire Piscarola Hornopiren and Salmones Frioaysen for $229 million.
This deal, which is expected to close in the third quarter of this year, will give Agrosuper additional licenses to support 40 salmon farms in the Aysen region of Chile.
Blumar has also had its eye on Chile’s Magallanes region, announcing in June of last year its decision to target an investment of $150 million into salmon farming operations across the region.
-Lynda Kiernan