Industry: Aquatic products Region: Russia Transaction price: $6 million Transaction method: equity investment
Project introduction
▪ Production of Atlantic salmon in the East Gate Special Economic Zone of Khorgos (close to China) using cyclic aquaculture system technology, with an annual output of 2,500 tons, which could be expanded to 10,000 tons
▪ Circulating aquaculture systems are provided by AquaMaof (Israel), a world leader in aquatic engineering, and create a risk-free, completely controlled environment for fish to grow
▪ High quality (premium grade, 4-5 kg/unit), fresh fish will be delivered to customers in a relatively short time (1-4 days) at affordable prices throughout the year, mainly for the internal market in China, Russia and Kazakhstan
Experience and investment
▪ The project sponsor is a Russian investment group with extensive experience in establishing and managing greenfield projects in a number of fields in the CIS countries
▪ Project sponsors plan to invest up to $6 million in their own capital market
▪ According to Mowi and the Norwegian Seafood Board, the global market for Atlantic salmon consumption reached 2.6 million tons in 2019, a fourfold increase since 1988, and global demand is expected to grow steadily at 3-5% per year between 2021 and 2025
▪ It is estimated that demand for salmon in China, Central Asia and Russia will reach 170,000 tons by 2021, of which about 95 percent will be imported
▪ The company plans to export about 40-50% of its total production to China. It is expected that the demand of Chinese salmon market will increase to 200,000 to 250,000 tons by 2025
▪ Kazakhstan provides support for strategic investment projects, tax incentives, state subsidies and compensation for costs during the life of the contract
Investment opportunities
▪ Company looking for $4 - $6 million equity co-investment (depending on financial liability share) to start salmon production in Kazakhstan in exchange for up to 50% stake in the project. The remainder will be financed by external debt ($26-28 million) and project owner equity investment ($4-6 million)
▪ In the second phase, the company is considering attracting an additional $110 million in investment to expand capacity to 10,000 tons