Since its launch in 2014, the Utrecht, Netherlands-based fund has invested in 22 aquaculture companies all along the value chain, whose technologies are all aimed at trying to make fish farming more sustainable.
Hofseth Biocare ASA (HBC) uses an innovative hydrolysis technology that preserves the quality of lipids, proteins and calcium from fresh salmon off-cuts, which enhances the value of waste streams of farmed salmon processing.
“We've been looking for great solutions around waste and the aquaculture sector for some time,” Mike Velings, who co-founded Aqua-Spark with his wife Amy Novogratz, told Impact Investor.
“It’s one of the biggest challenges in this industry. Our goal is to help drive the sector towards more sustainability and this is a really logical fit for our portfolio,” Velings said.
Annual investment returns of 20% or more
In a statement on the company website, Roger Hofseth, chief executive officer of HBC, hailed Aqua-Spark as “a highly competent investor within the aquaculture sector,” and an investor “that shares our sustainability focus.”
The pioneer investment fund is aiming for “comparable or better-than-industry average returns,” of over 20% annually for its investors, Velings said.
Aqua-Spark makes strategic investments for the long term, “without thinking about exiting the company at any point in time,” Velings added.
Novogratz and Velings said they stepped into the listed market for the first time because they believe HBC’s potential is “significant and undervalued by public markets on a long-term view.”
Aqua-Spark said it viewed HBC as a ‘best-in-class’ producer of consumer health and pet health ingredients, as well as an incubator of new drugs.
For example, HBC has patents and ongoing trials in the fields of asthma and Irritable Bowel Syndrome.
Seeking higher-value products
The global aquaculture market is expected to reach $245.2bn by 2027, up from $180.9bn last year, as demand for high quality fish surges worldwide, according to a report by Research and Markets.
HBC's solutions, which initially focus on Norwegian Atlantic salmon, have the potential to expand into “multiple species over time,” Velings said.
“For a large part of production in the West you see that if you fillet a fish, there is quite a bit of waste,” the investor said.
“In quite a few cases that's being used for fishmeal and fish oil and animal feed. It would be much better if we can find higher value, direct for human consumption solutions.”
By the end of this year Aqua-Spark will have invested in between 25 to 28 companies and have circa €300mn under management, Velings said.
The fund, which has attracted some 250 investors from 36 countries, aims to grow its portfolio to between 50 to 60 companies and to between €3bn to €5bn in assets under management by 2030, Velings added.
“If you look at where we came from, back in 2015 we started with €6.9mn in assets under management,” Velings said. “By the end of this year that will be about €300mn. If we keep the same growth rate, we'll get there.”