The Seafood Industry – An Investors Perspective · The Seafood Industry – An Investors...
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The Seafood Industry – An Investors Perspective Kristjan Th. Davidsson M.Sc. Fisheries Managing Director, Corporate Banking, Glitnir Iceland Paris - April 17th, 2007
Transcript of The Seafood Industry – An Investors Perspective · The Seafood Industry – An Investors...
The Seafood Industry – An Investors Perspective
Kristjan Th. DavidssonM.Sc. Fisheries
Managing Director,Corporate Banking,
Glitnir Iceland
Paris - April 17th, 2007
BIG & GROWING => Attractive to Investors
Aquaculture
$60 bill.
Capture Fishing
$80 bill. Primary Processing
Distribution
$60 bill. $80 bill.
Secondary Processing
$120 bill.
Estimated Total Value: $400 billion
Source: FAO, Glitnir Research
The Seafood Industry Value Chain
Oceans of Opportunities for Investors!
• Demand for protein and emphasis on health benefits growing
– Seafood consumption is increasing globally– New lifestyles with healthier diets lead to growing demand for seafood
• Consumption growth will be based on aquaculture
– Growth industries are the most attractive for investors
• Development is calling for consolidation
– Ecological & social responsibility are growing issues, increase investment need– Customers ever more demanding (& paying ever more!)– Steady and secure supply (and stronger bargaining power!)– Food safety, convenience and product development are costly– Consolidation yields attractive investment opportunities!
• Emphasis grows on scientific research & sustainable management
Still a fragmented industry, rapidly changing!
Source: Bloomberg, Glitnir Research
Top 10 Meat vs. Seafood
Source: Bloomberg, Glitnir Research
Management Buyout
Mergers & Acquisitions - Major Activities 2006
Development of Top 10 Icelandic FisheriesCompanies Total Quota Share in %
24%27%
32%
45%47%
50%
0%
10%
20%
30%
40%
50%
60%
1992 1995 1999 2002 2004 2005
Development of Operating ProfitIcelandic Seafood Industry
%
0
5
10
15
20
25
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Harvesting as a % of revenues
Processing, % of revenue
ITQ system in 1984
Transferable qotas in 1990
Allowing the Seafood Industry to be Business…
• Several important political issues:– Basic:
• Security and transparency, expressed in ratings.
– Management:
• Stability important => Sustainability is important.
• Rural policy (too) often distorts (subsidies, legal favourisation, restrictions, etc.).
• Taxation discriminating and distorting economy.
– Legal:
• Credibility and foresee-ability of legal environment.
• Clear and secure ownership rights (collateral).
• Investment (including foreign) regulations.
Allowing the Seafood Industry to be Business…
• Several important political issues:– Basic:
• Security and transparency, expressed in ratings.
– Management:
• Stability important => Sustainability is important.
• Rural policy (too) often distorts (subsidies, legal favourisation, restrictions, etc.).
• Taxation discriminating and distorting economy.
– Legal:
• Credibility and foresee-ability of legal environment.
• Clear and secure ownership rights (collateral).
• Investment (including foreign) regulations.
Commercial Investment Evaluation
Management team – capacity/track record etc.
Cash flow – size/stability/development/profitability
Capital structure – debt/equity
Operational environment – risk/environmental/legal
Industry fundamentals – status/development
What does an investor look at ?
DOES MY GUT FEEL COMFORTABLE?
Investing in the Seafood Industry for a Century
• Established 1904 as “The Fisheries Investment Fund”
Investing in the Seafood Industry for a Century
• Established 1904 as “The Fisheries Investment Fund”
• “One Stop Shop” for the Seafood Industry– Corporate Banking:
• Financing: Credits - WC/LT/Sr./Mezz./Lev./Leasing, Bonds, etc.• Services: Forex, Collections, Guarantees, Risk Management, Hedging, etc.
– Corporate Advisory:• Sales - Acquisitions – Mergers – Listings etc.
– Equity Investments• Investing own & customers funds, currently > USD 2 billion
Some Seafood Customers of Glitnir
Very uneven geographical distribution!
Promising Investment Opportunities!
Peter Drucker, Economist and Management Thinker
“Aquaculture represents
the most promising
investment opportunity
of the 21st Century”
<- Front page of Economist magazine, aug. 9th, 2003
Risk Profile; Shrimp vs. Salmon Farming
Source: World Economic Forum
49
60
1319
11
53
0
10
20
30
40
50
60
70
80
Country Credit Rating Contracts & LawSubindex
Corruption Subindex
An Industry allowed to be Industry will flourish!
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 20002 2003 2004 2005 9M2006
Ass
ets
EU
R bn
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
Mar
ket C
ap. E
UR
m
Assets Market Cap.
