Russian Aquaculture buys stake in fish processor, makes new share offering

Published on
November 20, 2017

Russia’s largest aquaculture company has acquired an option to purchase a 40 percent equity stake in Tri Ruchya, a fish-processing company in the Murmansk region.

Russian Aquaculture, which is currently the only company in Russia that farms Atlantic salmon in maritime conditions, and which has approximately 20 percent of the market share of the market for chilled salmon in Russia, said in a press release the deal will help it achieve more vertical integration. Tri Ruchya’s Murmansk facility has the capability of processing up to 25,000 tons of salmon annually and is located near where the Russian Aquaculture currently operates commercial Atlantic salmon farms.

“We welcome this opportunity for greater cooperation with our partner Tri Ruchya, which has proven to be professional and reliable,” Russian Aquaculture CEO Ilya Sosnov said. “Access to proven primary processing facilities is an important element in our production chain, because it guarantees high quality and timely processing of fresh fish in transparent and comprehensible conditions in the long term. Moreover, the transaction will allow the company to receive a share of Tri Ruchya’s profits, which will have a positive impact on Russian Aquaculture’s financial performance.”

Tri Ruchya has conducted processing of Russian Aquaculture’s salmonids for the past two years. However, the transaction gives Russian Aquaculture guaranteed access to processing facilities, “which will increase the company’s operational efficiency and reduce operational risks,” Sosnov said in the release.

“This investment is an important step in the company’s strategy to create a vertically-integrated holding,” he said.

The company also announced plans to make a secondary public offering of its shares, which are traded on the Moscow Stock Exchange under the symbol AQUA. It said it will offer between 14 and 18 million shares between a price range of RUB 110 and 140 (USD 1.85 to 2.36, EUR 1.57 to 2.00) per share, which represents the year-to-date range of the company’s average weighted share price. The offering is expected to generate as much as RUB 2 billion (USD 33.6 million, EUR 28.6 million) for the company.

"I have full confidence that our unique experience in the production of high-quality salmon in Russia, and the business's significant potential for growth will be interesting for a wide array of domestic and international institutional and private investors,” Sosnov said in a separate press release announcing the offering.

Sosnov said Russian Aquaculture 's long-term development strategy is focused on maintaining the company’s status as the largest player in Russia's aquaculture segment. Specific targets include producing all of its own feedstock and fry, operating all of its own facilities for primary processing, and growing production to 30,000 tonnes of salmon by 2025.

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