Russia’s biggest aquaculture company holding SPO to raise funds for expansion

Russian Aquaculture has announced it will conduct a secondary public offering on the Moscow Stock Exchange, where the producer is now listed. 

Funds gained through the SPO will go to finance general corporate needs and an extensive investment program aimed at becoming one of the biggest producers of Atlantic salmon across the globe, the company said.

Russian Aquaculture operates Atlantic salmon farms in the Barents Sea, trout farms in the Republic of Karelia, and owns cultivation rights for 29 sites for farming of salmon and trout. It has a 20 percent market share of the market of chilled salmon in Russia. 

The company has already made several big moves this fall. In October 2017, the company acquired Olden Oppdrettsanglegg AS, a smolt production facility in Norway, and in November 2017, the company acquired a 40 percent stake in Tri Ruchya, a primary fish-processing company in the Murmansk region. 

The initial public offering price, announced Thursday, 30 November, will be at RUB 120 (USD 2.05, EUR 1.73) per share. The current average price falls in the middle the range, the company said in a statement. Russian Aquaculture is offering up to 18 million shares and plans to raise up to RUR 2 billion (USD 33.3 million, EUR 29 million) by selling between 14 million and 18 million shares.  

“I think that the board of directors has set an attractive price that reflects the interests of both investors and the company,” Russian Aquaculture CEO Ilya Sosnov said in a press release. “Investors will have the opportunity to benefit significantly from future growth of the business, while the company will receive funds to invest in its expansion and attract high-quality investors whose involvement in the company will have a long-term positive effect on the share prices and equity story of Russian Aquaculture.”

A company’s representative told SeafoodSource that “the company has adopted a new long-term growth strategy that aims to create Russia’s leading aquaculture company, with its own production of feedstock and fry, as well as facilities for primary processing and a diversified base of biological assets.”

The new strategy, adopted in 2016, envisages a focus on the high-margin products and resulted in the company selling its distribution business to concentrate wholly on production. In the next few years, Russian Aquaculture plans to start farming mussels, crabs, scallops, and seaweed on sites in the Barents Sea. The diversification of products will help reduce biological risks and generate stable cash flow based on difference in fish-growth cycles, the company representative said. The company also hopes to begin selling some goods associated with fish production, for example, fish fat.

Another part of the strategy is an intensification of Russian Aquaculture’s salmon production. The company hopes to build a smolt plant in Russia and to increase production volumes to 25,000 to 30,000 metric tons in the next few years. The long-term goal is to create “one of the world’s largest producers of Atlantic salmon by volume,” the company representative said.