Pacifico Aquaculture Acquired by California PE Firm

January 9, 2018

Los Angeles-based private equity firm Butterfly announced it has acquired Pacifico Aquaculture, an ocean-based aquaculture operation with a focus on sustainability, for an undisclosed amount.

Founded in 2010 in Baja California Sur, Pacifico is the world’s leading and only producer of ocean-raised striped bass. The operation produces between 1,000 and 2,000 tons of fish per year, which are raised off the coast of Northern Baja. The farm’s fish are widely known for their high quality, superior flavor, and texture, and are sold through an extensive network of distributors and retailers across North America including Whole Foods and LoveTheWild (a portfolio company of sustainable aquaculture investor Aqua-Spark).

Founded by Adam Waglay and Dustin Beck – former executives from Kohlberg Kravis Roberts and Vista Equity – Butterfly was launched with the mission to make investments throughout the entire food value chain under a strategy that the firm’s website calls “from seed to fork”.

Through its debut $400 million fund the firm is making investments that fall within four verticals: agriculture and aquaculture, food and beverage, food distribution, and foodservice.

“Butterfly understands our business well and shares our vision for the future, and we are excited to have a partner with deep industry expertise in the food sector,” said Omar Alfi and Daniel Faraq, co-CEOs of Pacifico.

Looking to the Sea

Aquaculture is being targeted as a key production system for feeding the world’s rapidly growing population. As climate change, pollution, urban sprawl and other factors challenge agricultural production, aquaculture has the potential to scale up to help meet food demand for a world that will need to feed 9.7 billion by 2050.

To support the aquaculture sector in achieving its full potential, the U.S. National Oceanic and Atmospheric Administration (NOAA) Fisheries announced a new ruling on January 11, 2017 allowing for the expansion of fish farming in offshore Federal waters.

This plan, which is similar to an existing plan for the waters in the Gulf of Mexico, will outline the management of commercial fish farms located between three and 200 miles offshore around Hawaii and other Pacific Islands through the framework of a regulatory and permitting scheme, opening up new possibilities for industry expansion, innovation, and investment.

A study conducted by the University of California, Santa Barbara Bren School of Environmental Science and Management, published in Nature Ecology & Evolution in August 2017 concluded that the ocean is a vast and untapped resource for food production; finding that enough ocean raised fish could be produced to meet demand in an area of ocean equal to the size of Lake Michigan, reports News Deeply.

“The future for sustainable ocean-raised aquaculture is extraordinarily bright and we are excited to back the Pacifico team to help expand their reach throughout North America and around the world,” said Waglay. “We love that Pacifico is committed to sustainable and responsible aquaculture practices and has received numerous sustainability certifications and awards, including the highest four-star designation from the Global Aquaculture Alliance’s Best Aquaculture Practices (BAP) certification program earlier this year.”

This investment by Butterfly taps into macro drivers including population growth, shifts in diet, and consumer demands for sustainability and traceability in their food chains – all aspects that can add traction to an investment and generate superior returns.

Pacifico’s unwavering commitment to innovation, quality and sustainability has created a unique offering that is positioned extremely well for growth,” said Beck. “We are thrilled to partner with Omar, Daniel and the rest of the team to help them grow Pacifico into a world-class aquaculture platform.”

Not Alone

Butterfly is not the only fund seeing the opportunity in open ocean aquaculture investments. In April 2017, Cuna del Mar, an investment firm backed by the Walton family (the founding family of Walmart), invested $15 million in Boston-based InnovaSea Systems Inc. – developer of an all-inclusive system for open ocean fish farming.

Cuna Del Mar’s mission is to shift demand for seafood away from wild-caught populations and conventional fish farming systems to new production methods geared toward open ocean aquaculture that are economically viable while also being environmentally and socially sustainable.

Created in 2015 through the merging of two companies previously held in Cuna Del Mar’s portfolio – Maine’s Ocean Farm Technologies Inc. and Seattle-based OceanSpar – InnovaSea is dedicated to developing the next generation of technology for open ocean aquaculture, and is presently eyeing a commercialized release of its product this year.

Other producers are also eyeing the waters off of California.

In January of last year, Catalina Sea Ranch – a startup with the goal of producing two million pounds of sustainable shellfish per year from its 100 acre operation six miles offshore of Huntington Beach, California, successfully secured its first permit for offshore aquaculture in U.S. Federal waters from the U.S. Army Corps of Engineers. At the same time the company announced $2 million in funding from unnamed investors.

-Lynda Kiernan 

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

 

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