Big catch: Why Permira values Asian fish food group at $1b

The private equity firm’s Alex Emery sees Grobest as an increasingly valuable link in the food value chain at a time when pressure is mounting on farmers to use less antibiotics in acquaculture.

Permira has agreed to buy half of fish food company Grobest Holdings at a time when Asia’s burgeoning middle class is spending more on a healthier, protein-rich diet.

The European private equity firm's investment places an enterprise value on Grobest of around $1 billion. It will be in a 50:50 ownership partnership with the two Taiwanese families that founded Grobest in 1974. 

While Grobest already has feed mills spread across Thailand, Vietnam, Indonesia, China as well as Taiwan, it is poised to grow further.

“We think there’s huge potential for this company to continue to grow both organically and through M&A,” Alex Emery, head of Permira’s Asia operations, said in an interview with FinanceAsia.

The planned expansion comes as seafood wholesalers increasingly demand that the food production process is more transparent, traceable and less dependent on antibiotics. They are reacting to growing concerns among consumers about antibiotic resistance. 

"There is a big trend among consumers caring more about provenance but also about what the shrimp are fed," said Emery. 

Grobest makes a specialised feed for shrimp to eat, that’s tailored to their age and environment and designed to make them healthier.

“That’s one of the reasons we were interested in investing in Grobest,” said Emery. “They will help farmers up their game in terms of safe, reliable feed for fish and shrimp farms.”

While Grobest does not operate its own farms, the company can play a role in advising farmers on how to reduce the risks of animal hubandry, such as preventing diseases that could swiftly decimate fish populations. Grobest also offers consultation services to optimise filtration systems and achieve the right oxygenation levels in freshwater ponds that will boost the farmers' yield.

“Instead of just using guess work, as famers used to do, you can make it more scientifically based,” said Emery, whose team visited Grobest’s feed mills across the region.

Permira has spotted a part of the food value chain that is lagging the strides made in nutrition in, for example, poultry and pork production. Aqua feed in Asia has also fallen behind the application of science in fish farming that is common practice in other countries such as the Nordics.

“There is a big trend among consumers caring more about provenance but also about what the shrimp are fed,” said Emery, who believes there’s a growth opportunity for a company like Grobest that can harness technology to develop across the region.

China is the largest supplier and consumer of aqua feed in Asia, with a market share of 68%. Of sales in Asia excluding China, Vietnam’s market share is 31%, followed by Indonesia at 18%, Thailand at 17%, and India at nearly 16%, according to Planet market reports.

Permira’s move on Grobest is part of a broader bet by the firm on the food value chain, and on the role sophisticated technologies can play in improving food production generally.

Last year, Permira exited from Israeli micro-irrigation company Netafim at $1.895 billion, and before that, the company’s last aqua transaction was the 2015 sale of Pharmaq – a developer of fish vaccines – to Zoetis for $765 million.

Permira also exited in 2015 from Arysta LifeScience, which developed agrochemical and biosolutions to diseases in plants, and in 2011 sold Provimi, a provider of nutrition solutions for traditional chicken, pork and beef livestock, to food and agriculture mammoth Cargill at a gross multiple of 2.3 times.

This investment in Grobest is a natural play for Permira in an industry the firm is already very familiar with, despite risks factors at play through foreign exchange, or as a result of disease and fluctuating commodity prices.

“Grobest fits into that pattern of identifying companies that are using technology and advanced science to improve the way food is produced,” Emery said. “It’s a sector we know well.”

This deal took place after Peter Zuellig sold his poultry-to-fish feed business Gold Chain to Philippine conglomerate Aboitiz.

But, Zuellig also believes in the transformative power of technology in the aqua industry. He retained a 25% stake in the company wherein he plans to focus on genetics research that will alleviate prawn vulnerability to water-borne diseases.

Alex Emery spots value in food chain

“Water is a fickle environment,” Zuellig said. “Diseases spread much faster than in the air.”


Permira is not the only buyout firm to have turned its sights on Taiwan after a dry spell of private equity activity in the country.

KKR said in July it was planning its first deal on the island in about a decade: the delisting of LCY Chemical from the Taiwan Stock Exchange, alongside members of its founding family, which could potentially be worth $1.56  billion.

Taiwanese regulators rejected KKR’s buyout bid for electronics component maker Yageo in 2007.

Taiwan has advanced manufacturing capabilities that can be expanded across the region and a very liquid banking bank that has been consistently supportive of leveraged buyouts.

In the case of Grobest the founding families, have been very conservative about the leverage they want the Taoyuan City, Taiwan-headquarted company to bear in the deal with Permira;  partly because they want headroom to borrow in order to grow the company overseas.

With assistance from Molly Jackson 

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