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From: Aqua-Spark <willem(a)aqua-spark.nl>
Date: Tue, 21 Sept 2021 at 19:30
Subject: Aqua-Spark Soon Launches Africa Fund
To: <williamleschen(a)gmail.com>
Aqua-Spark Soon Launches Africa Fund to Ignite the Next Iteration of
Sustainable Aquaculture in Sub-Saharan Africa
<https://aqua-spark.us1.list-manage.com/track/click?u=d5eb256f9a9def92894b295b9&id=4108d3c538&e=4a4a245921>
Aqua-Spark Soon Launches Africa Fund to Ignite the Next Iteration of
Sustainable Aquaculture in Sub-Saharan Africa
Substantial investment is required in tilapia farming to both realize its
potential and, at the same time, ensure it plays a role in meeting the
foreseen surge in demand for protein in sub-Saharan Africa. At Aqua-Spark,
we believe that in the short term around $300m needs to be invested through
equity, which will only cover the current capital requirements of the top
25 most-needed investments in our pipeline for aquaculture in sub-Saharan
Africa. A significant amount of this total involves tilapia production and
its upstream and downstream value chain. These initial investments will be
the basis from which to develop and scale a regional industry. In this
blog, we will explain to you why Aqua-Spark will soon launch a special fund
dedicated to aquaculture in Africa.
*This blog was originally published as a chapter of our 92-page Aqua
Insights report: an Introduction to Tilapia in sub-Saharan Africa.
<https://aqua-spark.us1.list-manage.com/track/click?u=d5eb256f9a9def92894b295b9&id=7d3be09fbd&e=4a4a245921>*
Aqua Spark’s Investment Managers responsible for Africa: Joel Mugwisa
Ssemukaaya (L) and Jan Slootweg (R)
The figure of $300m is enough to fund the cornerstone investments required
to build this framework—but it’s just the tip of the iceberg. We have more
than 300 companies in our pipeline and their combined investment
requirement is a multitude of $300m. Moreover, these companies don’t only
look to raise investment through equity, but also through debt. If we were
to include that amount, we’d reach much higher figures. Therefore, it’s
time for us, and other investors, to step up.
We at Aqua-Spark are planning to play our part by launching our Africa Fund
in the last quarter of 2021—a dedicated fund that will close at $50m and
will grow to $300m over the next 6 to 8 years.
"A Significant Amount of Our Pipeline Consists of Tilapia-Related
Opportunities, but Salmon, Seaweed, Catfish, Sea Cucumber, and Shrimp
Farmers Are Also Raising Investment"
In our pipeline for sub-Saharan Africa, currently around 40% of the total
investment need and 50% of the opportunities are directly related to
existing and greenfield tilapia farms and hatcheries. But there are
also opportunities in salmon, seaweed, catfish, sea cucumber, and shrimp
production. Further, across species, a number of other opportunities can be
found, such as black soldier fly (BSF) producers, cold-chain and
distribution companies, as well as online B2B and B2C platforms for
marketing farm inputs and outputs.
The highest priority opportunities in tilapia in our pipeline lie mainly in
Western Africa (Ghana and Nigeria), the north of Eastern Africa (Kenya,
Rwanda, Tanzania, and Uganda), and the south of Eastern Africa (Malawi,
Mozambique, Zambia, and Zimbabwe) but there are also plenty of
opportunities in other countries.
Not all investors involved in tilapia in sub-Saharan Africa publicly
disclose the deals that they’ve made. However, some do. Figure X provides
an overview of those deals. Many investors perceive investing in Africa,
specifically in live animals, and even more so in such a nascent industry
as aquaculture, as very high risk. Even if investors are willing to take
that risk, for many, the ticket sizes are too small to manage. Therefore,
many investors still hold back and companies that do raise investment are
limited to the few large farms that have reached scale and several small-
and medium-sized farms which the investors believe have the potential to
grow. The investors that have become involved so far are mainly DFIs and
impact investors. But to attract a more diverse group of investors, the
challenges of perceived risk and ticket sizes have to be overcome.
Figure 1: an overview of publicly disclosed investments in tilapia farms in
sub-Saharan Africa
"Aqua-Spark to Launch a Dedicated $50m Fund in Q4 2021 Aiming to Overcome
Some of the Challenges Related to Investing in Aquaculture in Sub-Saharan
Africa"
At Aqua-Spark, we aim to be part of the solution: we’re launching a
separate fund for aquaculture in Africa. The Africa Fund focuses on
building aquaculture infrastructure across the continent to enable a
thriving aquaculture industry that focuses on regional food security. The
fund’s core investments will be 6-8 vertically integrated farming hubs
(over 20,000 MT per hub) where we envisage that about 50% of production
will be through outgrower programs. The Africa Fund will also invest in
small- and medium-sized farming operations and the broader aquaculture
value chain (including feed ingredients, technology, cold chain, marketing
and distribution, genetics, and animal health).
The current lack of aquaculture infrastructure makes the sector in
sub-Saharan Africa a different (risk) profile to that which the investors
in our main fund signed up for. The Africa Fund will therefore raise funds
from investors with specific investment objectives or with a different risk
appetite. It will also allow investors who struggle with the typically
small ticket sizes of
individual deals to get involved. The Africa Fund gives investors the
chance to build a portfolio of investments, which will avoid the
concentration risks associated with investing in only a couple of
companies. The minimum investment amount to get involved will be $1m for
individuals and $2.5m for institutions. The fund will provide equity—and
convertible debt in specific cases—and the initial ticket size will range
from $0.25-$5.0m. Aqua-Spark will have a minority position of 20% to 49%
and a board seat in the companies we invest in. Aqua-Spark portfolio
companies benefit from being part of a global ecosystem of committed
industry stakeholders. All of Aqua-Spark’s portfolio companies commit to
working together, offering each other favorable terms, and to making the
industry more sustainable. This means that all the companies invested in
through the Africa Fund will have access to global partners within the
Aqua-Spark ecosystem, as well as access to key inputs at favorable
conditions and pricing, allowing them to reduce costs and improve
sustainability.
The first round of the fund will close at $50m. We aim to raise an
additional $250m within the next 6-8 years and to grow the fund further
after that depending on the capacity to deploy. The initial $50m allows us
to finance a significant part of the immediate funding requirement of some
of the top 25 companies in our pipeline, and with $300m we’ll be well
positioned to finance the longer-term future of aquaculture in sub-Saharan
Africa.
Do you want to get involved as an investor? Please leave your details at:
https://www.aqua-spark.nl/invest-with-us/
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Looking for investors? Then please leave your details at:
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our free 92-page in-depth tilapia in sub-Saharan Africa report.
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