Sweeping acquisitions of Russian pollock combines by giant Chinese Group. Part 1
Russia’s major Alaska pollock harvesters have fallen prey of sweeping acquisitions by what was described as entities affiliated with one of the world’s leading frozen fish suppliers Pacific Andes based in Hong Kong, reports Russia’s FINANS Magazine No. 39 (176) dated 9 – 15 October 2006, website www.finansmag.ru.
The latest deals reportedly took place during the past summer when large packs of shares of Nakhodka-based NBAMR plc and Vladivostok-based CJSC Roliz were purchased.
According to RFE sources quoted by the magazine, the value of the transactions amounted to $130 million for the Chinese to take over 70% of the shares of NBAMR from the previous owners CJSC Dalinvestgroup and about 100% of the shares of CJSC Roliz reportedly controlled by Primorye’s Governor Sergey Darkin who has thus pulled out of the fishing business, said the report.
According to the CEO of Vladivostok-based equity firm Vostok-Invest Alexander Ganzhin, the reported price paid by the Chinese is very good and may be put to the credit of the shareholders of the pollock combines. If the figure is correct, this should very positively compare with only $20 million paid for 50% of the shares of NBAMR by the entities of the conspicuous businessman Alexander Abramov back in 2003.
The price has gone up with the improved market for Alaska pollock in 2005–2006, the species making the core of production of the both harvesters.
Pacific Andes appears to be an ideal buyer for the Russian APO producers. Being one of the largest suppliers of APO fillets to the world markets, until 2005 the operation had been in business only for processing and distribution. However three years ago the group set out to implement a new strategy to create a vertically integrated concern to include the entire cycle starting from fishery up to the distribution of finished products. Along these lines, the group established the respective dedicated division which reportedly acquired the Peruvian company Alexandra S.A.C.
Still, according to the magazine, Pacific Andes put forward fishery in the Russian Far East as another major priority with the first acquisition taking place in 2005. More specifically, the Singapore-based subsidiary of Pacific Andes purchased 100% of Chukotka-based Tralflot plc and a controlling pack of shares of Kamchatka-based Okeanrybflot.
It is claimed that in 2005 the Chinese were also negotiating purchase of shares of another major pollock harvester Preobrazhenskaya Trawler Fleet Base plc with headquarters near Vladivostok though no confirmation or denial of the deal has been made.
According to some experts, RFE’s fishery industry is one of the less transparent sectors where it is not customary to own shares directly. In particular, out of 10 major fleets only two or three firms have an understandable ownership structure while the other owners will typically assign shares to third parties.
This may however change as the structure of the Russian assets of Pacific Andes may probably go transparent quite shortly, the report explained.
Most probably Kamchatka-based Okeanrybflot has been selected for the consolidation centre as its shareholders’ General Meeting scheduled for end of October 2006 is supposed to approve seven deals to purchase shares of other companies to the tune of $300 million.
This figure appears fantastic not only for Okeanrybflot (total sales of RUR 2.5 billion in 2005 or ca. $68 million) but for the entire fishery sector of the Russian Far East, the report emphasized. To bridge the gap, the Meeting is also supposed to approve the necessary loan which would be record-high for the regional economy.
The magazine claims that the above deals will enable the Chinese concern to control at least 35% of the catch in the Russian Far East and about 80% of the harvest of Alaska pollock, which has traditionally been making the bulk of the profits.
To be continued