Russia’s Gidrostroy buying competitor PBTF, eyeing additional quota

Published on
July 11, 2018

Russian Kuril Islands-based Gidrostroy group of companies has reportedly closed a deal to purchase its competitor, Preobrazhenskaya Basa Tralovogo Flota (PBTF), making it one of the biggest players in the Russian fishery industry. 

Gidrostroy, via its subsidiary Ostrov Sakhalin, acquired a 96.38 percent stake in PBTF, Russian business paper Kommersant reported. The sellers were Irina Gerasimenko, Olga Kravchenko, and Nikita Kozhemayko – the wife, the sister, and son of Oleg Kozhemyako, the acting governor of the governor of the Sakhalin region. The former owners wanted to leave business, as Russian federal authorities had asked Oleg Kozhemyako, who used to be an entrepreneur until the early 2000s, to choose between business and state service, the business journal Vedomosti reported.

The value of the deal was not disclosed by the parties involved, but Kommersant sources suggested it could be USD 430 million (EUR 366.5 million). Experts interviewed by business paper RBC said that PBTF could be valued at more than USD 600 million (EUR 511.4 million). Either way, it is the biggest acquisition in the Russian fishery industry since 2013, when the Russian Fishery Company purchased  four companies in the Russian Far East for nearly USD 540 million (EUR 460.2 million). 

Gidrostroy was founded by former military engineer Alexander Verkhovsky in 1991 on the Kuril Islands, a Russian territory in the Sakhalin region, parts of which are also claimed by Japan. Verkhovsky also worked as a senator representing the Sakhalin region in the Russian parliament from 2010 to 2017. Russian media dubbed him “the Lord of the Kurils” and consider as one of the most influential figures in the Russian Far East and the country’s seafood industry. 

The group owns more than dozen companies specializing in fishery, fish processing, and construction, and operates a fleet of 40 vessels catching 200,000 metric tons (MT) of fish annually. The company also owns four fish processing plants with a daily output of 1300 MT and 12 salmon hatcheries with an output of 350 million salmon fingerlings, accounting for 30 percent of Pacific salmon fingerlings’ annual production in Russia. Gidrostroy has said it will open a new state-of-the-art fish processing plant on Shikotan Island in fall 2018. As part of the purchase agreement, Gidrostroy obtained PBTF’s quotas for 1,170 MT of crab for 2018. 

PBTF, founded in 1930, operates 12 vessels catching pollock, herring, crabs, salmon, and saury in the Sea of Japan, the Sea of Okhotsk, and the Bering Sea. The company purchased two advanced super-trawlers over the past 10 years, according to its website.  It also operates processing facilities and an aquaculture farm, as well as repair and supplying facilities. PBTF has a right to quotas of 100,000 MT of pollock and 30,000 MT of herring. The total catch in 2017 is estimated to be 150,000 MT. The company’s net income in 2017 was RUB 243.1 million (USD 4 million, EUR 3.34 million).

The acquisition makes Gidrostroy the second-ranked player in the sector by annual catch and quotas, industry experts calculated. With PBTF’s quotas, Gidrostroy now controls quotas for 427,000 MT, which ranks the company second to the Norebo company, owned by Vitaly Orlov (437,000 MT). The third position in this quota rating is occupied by the Russian Fishery Company, which has 342,000 MT of quota and is owned by Gleb Frank.

Regarding annual catches, using 2017 catch totals, Gidrostroy will now be ranked second with 350,000 MT, while Norebo led with 600,000 MT of catch in 2017, and RFC was third with 326,000 MT.  

Both Gidrostroy’s and PBTF’s quotas are still to be prolonged for another 15 years. The Russian Federal Agency for Fisheries is currently conducting the campaign of reassigning these quotas based on a catch history principle, agency head Ilya Shestakov told SeafoodSource in April.

Industry experts interviewed in Russian media outlets were sure that the companies’ quotas will be prolonged, given the importance of fishery for the development of the Russian Far East, especially the Kuril Islands. 

Reporting from Saint Petersburg, Russia

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