Aqua-Spark launching Africa Fund
At least 25 aquaculture enterprises in sub-Saharan Africa are set to benefit from an initial USD 50 million (EUR 42.6 million) of seed money that global investment firm Aqua-Spark has set aside for the planned launch of its new African Fund in the fourth quarter of 2021.
The fund, which will help address some of the challenges related to investing in aquaculture in Sub-Saharan Africa, will be scaled to USD 300 million (EUR 255.9 million), with an additional USD 250 million (EUR 213.2 million) expected in the next six to eight years.
The Dutch investment fund said the Africa Fund “will allows us to finance a significant part of the immediate funding requirement of some of the top 25 companies in our pipeline, and with USD 300 million (EUR 255.9 million) we’ll be well positioned to finance the longer-term future of aquaculture in Sub-Saharan Africa.”
The focus of the initial investment, which targets tilapia production – and its upstream and downstream value chain – will be Ghana, Nigeria, Kenya, Rwanda, Tanzania, Uganda, Malawi, Mozambique, Zambia, and Zimbabwe.
“The minimum investment amount to get involved will be [USD 1 million, EUR 860,600] for individuals and [USD 2.5 million, EUR 2.1 million] for institutions,” Aqua-Spark said. “All the companies invested in through the Africa Fund will have access to global partners within the Aqua-Spark ecosystem, as well as access to key inputs at favorable conditions and pricing, allowing them to reduce costs and improve sustainability.”
It said the investment will be both in equity and convertible debt in specific cases, with the initial ticket size ranging from USD 250,000 to USD 5 million (EUR 215,00 to EUR 4.3 million) targeting “small- and medium-sized farming operations and the broader aquaculture value chain, including feed ingredients, technology, cold chain, marketing and distribution, genetics, and animal health.”
Africa Fund’s core investments will concentrate on at least six to eight vertically integrated aquaculture enterprises, each with a capacity of more than 20,000 metric tons, with about 50 percent of the production being grow-out programs.
Aqua-Spark will take up 20 percent to 49 percent shareholding of the companies it will invest in, including a board seat in each of them.
“We have more than 300 companies in our pipeline and their combined investment requirement is a multitude of USD 300 million (EUR 255.9 million),” the fund said. At least 40 percent of the total investment need in Sub-Saharan Africa and 50 percent of the investment opportunities available are directly related to existing and greenfield tilapia farms and hatcheries, according to Aqua-Spark.
Currently, many investors consider investing in Africa’s aquaculture industry “a very high risk,” and initiatives such as the Africa Fund would help address the challenge of perceived risk and scale up the size of aquaculture enterprises hence attract more financing.
“Even if investors are willing to take that risk, for many, the ticket sizes are too small to manage,” Aqua Spark said.
The fund further identified more investment opportunities in Sub-Saharan Africa such salmon, sea cucumber, shrimp, and black soldier fly production. This is in addition to the cold-chain and distribution and online B2B and B2C platforms for marketing seafood inputs and outputs.
The launch of the Africa Fund could be a major boost for Africa’s aquaculture industry. The Food and Agriculture Organization (FAO) continues to find that “the lack of capital remains one of the biggest barriers to aquaculture development in Sub-Saharan Africa.”
Photo courtesy of Aqua-Spark