Professional Documents
Culture Documents
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!! Oceanis is the worlds first global private equity player to be dedicated exclusively to the seafood and aquatic resource sector !! Founded in 2010, the company has offices in Dubai and New York !! Oceanis works with a selected number of investors through customized investment structures !! Our team combines capital markets, private equity, strategy consulting and aquatic resources operational / technical expertise
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Capital Supplier
Private Equity Investor
Capital Demand
Aquaculture Operation
Oceanis View
!! We will focus on the alternative investments asset class, and private equity (PE) in particular !! Growth of Thematic PE !! What PE investors look for and what they can bring to aquaculture
!! Private capital vs. public capital in the seafood sector !! Aquacultures macro dynamics are appealing to PE investors
!! Potential mismatches between the aspirations of classic private equity funds and the fundamental dynamics of aquaculture !! An alternative approach !! An investment case study
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Comments
!! Despite a very public flameout during the financial crisis, alternative investments grew up to USD 6.5 TN in 2011, around 15% of the global institutional and retail investment market !! This represents a compounded annual growth rate of 14.2% over 6-year period, outperforming traditional asset class growth !! Alternative includes Private Equity, Hedge Funds, Real Estate, Infrastructure and Commodities
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Non-alternative
Alternative
Comments
!! Private Equitys percentage allocation will more than double from 2009 to 2013, particularly in the US market where it will reach 7.3% (5.1% expected in Europe)
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2011
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Source: McKinsey Financial Investment Practice, Global Survey on Institutional Investing, 2011
!! Thematic investing is about capitalising on future macro trends, as opposed to allocating to incumbent sectors, based on the assumptions that past winners will continue to win !! Increase of thematic PE and venture capital funds observed in the last decade !! Examples of popular thematic funds: "! Clean-tech "! Agriculture "! Timberland "! Biotech "! Healthcare "! Energy & Natural resources
At our recent London Ideas Exchange conference, the majority of the audience believed that thematic investing is an under-exploited way to capture value
Towers Watson (firm), March 2011
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Visibility
Control
!! Strategic thinking capabilities to support long term plans !! Assistance and support in executing a strategy, with global connections !! Corporate finance and capital markets expertise and relationships !! Follow-on investments !! Catalysis of third party PE capital flow !! Key role in shaping and executing the exit process !! Synergies with other portfolio companies, particularly in the case of a thematic PE player (e.g. downstream sales and distribution, logistics, technology) !! Access to customers and JV partners
Synergies
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Seafood & Aquaculture Market Size Comparison Comments
!! Total seafood and aquaculture market (yearly revenue) is estimated at USD 500 BN1 !! Yet the aggregate market capitalization of public companies accounts for less than USD 30 BN (June 2012)2 !! Private owners control more than 90% of the sector !! In comparison, private owners only control 25% of the total US economy !! Marine Harvest, the largest public company is only USD 3 BN market cap Total market capitalization of publicly traded companies2
DEMAND
USD 30 BN
Estimates Bubbles to Scale
1)! Estimate based on annual production of 150MM MT of fish (2012), at an average retail selling value of around 3 USD/Kg 2)! Estimate based observing 65 of the largest seafood / aqua companies by market capitalization as of June 2012
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Growing Demand
!! Increasing population trend !! Correlation with GDP/Capita Total Global Aquatic Organism Production growth !! Healthy and highly efficient source Forecas 180 t of protein 160 !! Compelling non-food opportunities
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Constraine d Supply
!! Resource depletion !! Increasing limitations of other 100 80 sources of proteins (e.g. land and freshwater use, high FCRs 60 etc.) !! Good growth expectations over 40 the long run, albeit tempered by 20 0 the emergence of sustainable 1950 fisheries !! Expectation of decoupling from economic cycles (efficient source of protein)
MM MT
90MM MT
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1970
1980
1990
2000
2010
2020
Wild catch
Aquaculture
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DEMAND
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Aquaculture is one of the most efficient ways to produce animal protein, when considering feed Furthermore, marine based aquaculture uses very limited fresh water, as opposed to land based animal production which actually consumes huge volumes
Average(1) FCR Values
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1)! Cattles FCR values vary from 7 to 10, Poultrys from 2 to 4. 2)! The analysis does not include water requirements for feed production. Source: FAO Fishery and Aquaculture Statistics, FAO report Livestocks long shadow, environmental issues and options.
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PE Investors Concerns
!! Deep industry knowledge and dedicated resources / time required to assess the opportunity !! PE investors want to see proven ability to execute plans and generate sustained cash flows with high ROEs
Maturity Stage
Track Record
Capital at Risk
!! Difficult to protect the downside !! Risk of total write off in a worst case scenario
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PE Investors Concerns
!! Governance and regulatory issues !! Can they gain control, or at least negative control?
Governance
Investment Size
Timing
!! Track records often show that it always takes longer than expected !! Break-even for start ups sometimes requires more than 5 years
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Required Characteristics for a PE investor in Aqua !! Patient capital provider !! Long term focus !! Thematic investment mindset !! Commitment to fundamentals !! Desire for inflation protection !! Belief in the efficient protein story !! Pension funds !! Life insurance companies Investor Type
Early Stage
!! Family Offices
The aquaculture sector still needs more nurturing and development before it will be seriously interesting to a large number of classic PE funds. Oceanis therefore works with more patient pools of capital to catalyse such development
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Revenues EBITDA
Years
Phase
Source of Funds
!! Prove the concept on semi-commercial scale !! Generate consistent revenue stream !! Focus on the market !! Development banks !! Founder capital !! Angel investors
!! Reach full vertical integration !! Diversification into various markets and species !! Private equity capital (generalists) !! Public markets / banks !! Reinvested profits
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Snapshot of SIV Targets
Export to Russia
Export to Asia
MENA Demand
Sea bass Logistics/Processing/Technology/ Cages/RAS/Feed
!! The MENA region offers good endemic bio-diversity and excellent natural aquatic resources !! Geographic differentiation will minimize extreme risks (e.g. natural catastrophes, diseases, political risk) and provide overall protection to the invested capital !! The MENA region has the potential to become a significant international production centre for aquatic products
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