At least 25 aquaculture companies in sub-Saharan Africa will benefit from a starting capital of $ 50 million (€ 42.6 million) that global investment firm Aqua-Spark has allocated for the planned launch of the African Fund in the fourth quarter of 2021.
The fund, which will help address some of the challenges associated with investing in aquaculture in sub-Saharan Africa, will be raised to $ 300 million (€ 255.9 million), with an additional $ 250 million (€ 213.2 million). ) expected in the next six to eight years.
The Dutch investment fund said that the Africa Fund “will allow us to finance a significant portion of the immediate funding needs of some of the top 25 companies in our pipeline and with $ 300 million (€ 255.9 million) we will be well-positioned to finance the long-term future of aquaculture in sub-Saharan Africa ”.
The focus of the initial investment, which targets tilapia production- 1; and its upstream and downstream value chain – will be Ghana, Nigeria, Kenya, Rwanda, Tanzania, Uganda, Malawi, Mozambique, Zambia and Zimbabwe.
“The minimum investment amount to get involved will be [USD 1 million (EUR 860,600)] for individuals and [USD 2.5 million (EUR 2.1 million)] for institutions, “said Aqua-Spark.” All companies they have 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 favourable conditions and prices, enabling them to reduce costs and improve sustainability “.
He said the investment will be both in equity and convertible debt in specific cases, with an initial ticket size of between USD 250.00 and USD 5 million (EUR 215.00 to EUR 4.3 million) targeted to “small and medium-sized farms”. operations and the wider aquaculture value chain (including feed ingredients, technology, cold chain, marketing and distribution, genetics and animal health ”.
The main investments of the Africa Fund will focus on at least six to eight vertically integrated aquaculture companies, each with a capacity of over 20,000 tons, with approximately 50 per cent of production in growth programs.
Aqua-Spark will take 20 to 49% of the shares of the companies in which it will invest, including a seat on the board of directors in each of them.
“We have more than 300 companies in our pipeline and their combined investment needs are a multitude of $ 300 million (€ 255.9 million),” the Fund said. According to Aqua-Spark, at least 40 per cent of the total investment needs in Sub-Saharan Africa and 50 per cent of available investment opportunities are directly related to existing and greenfield tilapia farms and hatcheries.
Currently, many investors view aquaculture investment in Africa as “a very high risk” and initiatives such as the Africa Fund would help address the perceived risk challenge and increase the size of aquaculture businesses, thereby attracting more funding.
“Even if investors are willing to take this risk, for many the ticket sizes are too small to handle,” Aqua-Spark said.
The Fund also identified additional investment opportunities in Sub-Saharan Africa, such as salmon, sea cucumber, shrimp and soldier fly production. This is in addition to the cold chain and distribution, B2B and B2C online platforms for the commercialization of inputs and outputs of seafood products.
The launch of the Africa Fund would be an important boost for the African aquaculture industry. The Food and Agriculture Organization (FAO) continues to believe that “the lack of capital remains one of the major obstacles to the development of aquaculture in sub-Saharan Africa”.
