Hofseth invests in Australian kingfish producer Clean Seas

Ålesund, Norway-based Hofseth Group has taken an AUD 5 million (USD 3.2 million, EUR 2.9 million) equity investment in Port Lincoln, South Australia, Australia -based yellowtail kingfish farmer Clean Seas Seafood.

The investment will give Hofseth and investment partner Nevera AG 10 million shares in the company, amounting to 9.7 percent stake of Clean Seas’ ordinary share capital.

The partnership will enable Clean Seas to tap into the Norwegian aquaculture producer’s global distributor network and have the capital to fast-track new product development, with the target of greater penetration of retail markets in North America, Europe, and Asia, according to a company press release.

Hofseth Group is a farmer and processor of Atlantic salmon and trout, producing approximately 11,000 metric tons (MT) of salmon annually and processing more than 60,000 MT. It exports products to more than 20 countries, and has a larger presence in the U.S., to which it sends around one-third of its annual output. It also recently opened sales offices in Singapore and Shanghai.

Nevera AG Capital Markets is a financial consultancy boutique based in Freienbach, Switzerland. Its founder and CEO, James Berger has previously invested in aquaculture and consumer nutrition ventures and under a proposed consultancy agreement, will assist Clean Seas “with certain intermediary services, in establishing a wider base of international investors, and helping the company communicate with potential investors,” according to a Clean Seas press release.

“Berger and Cleans Seas believe that a wider international base will facilitate positive value development,” the company said. “Nevera’s unique offering is based on Mr Berger’s nineteen years of working in global fund management and banking in London, New York, and Switzerland.”

Clean Seas Managing Director David Head the investment supports his belief that yellowtail kingfish can become a more mainstream seafood product globally.

“This announcement represents important new relationships for Clean Seas as it seeks to diversify and build a multi-channel distribution business by expanding its presence in the largely untapped global retail market,” Head said. “This exciting new alliance combines Hofseth’s significant expertise, relationships, and global reach in the retail channel with Clean Seas premium product and market-leading position in the high-end restaurant and foodservice channel. James Berger’s capital markets network and proven track record will be of great assistance as we seek to share the Clean Seas investment story around the world. These relationships and the associated AUD 5 million investment in Clean Seas at this time of global uncertainty validates and supports Clean Seas’ ‘Vision 2025’ strategic plan and further strengthens the company’s balance sheet.”

Hofseth Group CEO Roger Hofseth said the COVID-19 pandemic has changed the market for kingfish, but that was not a deterrent to his investment.

“I see a fantastic opportunity to work with one of the most high-end, unique species of fish in the world, and then to leverage that supply into our experienced sales force and broad distribution network through retailers across the U.S. and Asia,” Hofseth Group CEO Roger Hofseth said. “The current global circumstances associated with coronavirus have obviously created extreme changes in consumer behavior. There has been a massive boost to consumption of frozen fish all over the world and that is continuing. It is possible that even as the environment normalizes, consumption of fresh and frozen nutritious fish at home will likely stay at significantly higher levels than pre-COVID-19.”

Despite the coronavirus crisis, Hofseth called the current moment “opportune” for Clean Seas to expand its distribution.

“It harvests a unique species that is in tight supply and usually fills the majority of Michelin-starred restaurants all over the world. We will now be able to offer this excellent product to consumers at home,” he said. “Hofseth North America will also benefit from being able to offer a wider assortment of species to customers and still ensure supply of high-quality, sustainable products. We believe we can bring significant value to Clean Seas by bringing kingfish volume into our channels.”

The investment will occur in two tranches, with four million shares placed immediately and the remaining six million shares to be placed subject to approval by Clean Seas shareholders, subject to their approval at a general meeting “to be convened as soon as practical, with the intention  that it will be held by mid-May 2020,” according to the company.

Nevera AG CEO James Berger said he was excited to see how the company could take advantage of new market opportunities under the partnership.

“After spending time in South Australia on site visits at CSS, and having a fundamental operational understanding of the Hofseth Group, I can see significant synergies and huge top-line growth opportunities for both businesses here today, for what is otherwise a difficult time for most of the global economy,” he said. “Sustainable premium protein and health nutrition is a theme that will just grow from the present day, particularly following COVID-19.”