Mitsui doubles down on aquaculture with investments in FRD Japan and Industrial Pesquera Santa Priscila

Tokyo, Japan-headquartered Mitsui & Co. recently attained large stakes in two aquaculture companies: FRD Japan, a land-based recirculating aquaculture system (RAS) rainbow trout farming company, and Ecuador-based Industrial Pesquera Santa Priscila, the world’s largest shrimp-farming company.

On 20 July, Mitsui announced that it subscribed to purchase additional shares in FRD Japan amounting to JPY 7.85 billion (USD 54.3 million, EUR 49.3 million) in a third-party allocation deal worth JPY 21 billion (USD 145.3 million, EUR 132 million). Other investors in the allocation include Air Water, Inc., STI Food Holdings, Sekisui Chemical Co., Haseko Corp., Sumitomo Mitsui Trust Bank, and MUFG Bank.

Mitsui initially invested in FRD, based in Saitama City, Japan, in April 2017, when it acquired 80 percent of FRD’s shares for JPY 900 million (USD 8.4 million, EUR 6.7 million in April 2017). The other shareholders at the time were Taiyousuiken Inc. and KGC, Ltd., both of which acquired 10 percent each.

In addition to the capital injection from investors, FRD has signed loan agreements with several financial institutions through Japan’s Sustainable Blue Finance Framework, which promotes the financing of businesses that contribute to marine conservation and sustainable fisheries. Though land-based aquaculture is similar to factory farming, businesses in this sector often emphasize its sustainability by highlighting the fact that the practice reduces fishing pressure on wild stocks and eliminates the release of fish feces into the ocean, granting them the benefits of the framework by doing so.

Since Mitsui’s initial investment, it has supported FRD’s research and development activities at its pilot plants in Saitama City, Saitama Prefecture, and Kisarazu City, Chiba Prefecture. The two farms have been in operation since 2018, farming more than 20 generations of fish.

After the capital increase fully dilutes Mitsui’s existing shares, the company will be left with a 50.4 percent majority ownership of FRD. FRD will use part of the money for working capital, research and development, and investments, but most of the money will go toward building a new land-based rainbow trout aquaculture facility with an estimated annual production scale of 3,500 metric tons (MT) in Futtsu City, Chiba Prefecture.

The company started work on the facility in July and plans to begin operation in 2026, with the aim of delivering its first shipment in 2027.

Japanese retailers often label trout raised in salt water as “salmon-trout,” and labeling trout as salmon is an accepted practice. Land-based aquaculture for salmon and trout is attracting a lot of investment in Japan, but the high capital investment needed to cover technology and energy costs make financial viability difficult. Therefore, the new investments in FRD are essential to its plans of scaling up production.

According to the company, conventional land-based RAS requires water changes of around 30 percent per day to prevent the accumulation of nitric acid. FRD Japan, however, has developed a denitrification device that removes nitric acid using bacteria. This has enabled the company to eliminate water changes, and the company only replenishes water lost through evaporation.

Mitsui’s other big aquaculture investment in Industrial Pesquera Santa Priscila (IPSP) – based in Guayaquil, Ecuador – further increases the company’s stake in shrimp. Mitsui bought shares valued at USD 360 million (JPY 50 billion, EUR 327.9 million) and will make IPSP an equity-method affiliate, indicating a 20 percent to 50 percent shareholding, within the fiscal year ending March 2024.

Mitsui made the new investment through a Singapore-based holding company owned by IPSP’s founders, the company said in its 7 August announcement.

With annual production of 177,000 MT and sales of USD 1.4 billion ( EUR 1.27 billion), IPSP  is the world’s largest shrimp-farming company, accounting for 6 percent of the global shrimp trade volume.

Mitsui has already invested in Vietnam-based Minh Phu Seafood, the world's largest shrimp-processing company. In 2019 it acquired a 35.1 percent stake in the company, and has been strengthening its shrimp processing and sales ever since.

The company said that through its investments in IPSP and Minh Phu, it is well on its way to achieving its goal of becoming a leading global player in the shrimp industry by investing in the entire value chain, including breeding, feed, farming, and more.

“In Ecuador, the world's center of shrimp farming industry for export, Mitsui and IPSP's founders will jointly collaborate to pursue increased productivity and efficiencies, to optimize operational excellence and best serve customer's needs,” Mitsui said in a release announcing the investment. “Through this investment in IPSP, Mitsui aims to become a leading global player in the shrimp industry by extending the value chain to upstream such as breeding, feed and farming.”  

Image courtesy of FRD Japan