In July 2015 the aquaculture genetics and research company Akvaforsk Genetics Center AS (AFGC) and American based Spring Genetics were sold to Benchmark Holdings PLC. Benchmark paid a combined total of NOK 140m for the two businesses – a natural consequence of Benchmark's taking over SalmoBreed, where AFGC was a part-owner, in November last year (this acquisition also included Icelandic Stofnfiskur).
A significant part of the NOK 140m will subsequently find its way to the owners of VESO AS, on top of an accumulated dividend of NOK 131.8m (more below). With one-third of the shares in VESO, the Norwegian government is also a receiver of a cut.
Research licenses
According to a report in Blue Frontier Magazine (pay wall) Benchmark Holdings' acquisition of AFGC shows the value of free research licenses, issued by the Norwegian government to selected companies in the aquaculture sector.
Benchmark is not alone in putting high values on individual aquaculture businesses. The other big example was American animal feed giant Cargill's acquisition in August 2015 of the salmon feed maker EWOS for EUR 1.35 billion. Only two years earlier, the Norwegian government sold the same company to private equity funds Altor and Bain for half the amount.
The research licences that to such an extent attracted Benchmark's interest in Akvaforsk Genetics Center AS is handed out by Norwegian fishing authorities to selected companies to stimulate the Norwegian fish farming industry. The arrangement aims primarily at research institutions at universities or university colleges. In particular instances, where a farming plant is an integral part of a research project, a research licence can be granted to a private company (like AFGC).
Read more about research licences here (Norwegian).
From the government directorate (Fiskeridirektoratet), the institution that administers the research licences, Blue Frontier Magazine is told that such licences have been known to increase a company's valuation. Apart from stating this fact Fiskeridirektoratet is not willing to comment on Benchmark's evaluation of AFGCs license.
Skjævestad and Ruud
Benchmark acquired AFGC from AFGC's owner VESO. Veso's primary stakeholders are Aquanova Invest (61%) and the Norwegian Ministry of Agriculture (34%). In its turn, Aquanova is owned by Altavida (Bjørn Skjævestad) and Futuro (Arne Gulbrand Ruud). Ruud is the CEO and Skjævestad the COB of VESO AS. Until the mid 1980-ties, VESO was the monopoly provider of vaccines to the Norwegian aquaculture market. (Key figures in NOK below.) From 2008 to 2014, the VESO-owners have accumulated a dividend of NOK 131,8 million.
In a statement for Blue Frontier Magazine following the Benchmark take-over, Skjævestad and Ruud explain how the ongoing structuring of the industry makes it difficult for AFGC to stand alone. "With Benchmark's commitment to both salmon and tilapia genetics, it was a natural solution to combine the biggest independent competence milieu within these two species and one of the breeding companies together."
The research licences have, according to Ruud and Skjævestad, first of all, been significant to document the advances in the breeding and to test new solutions in larger scales.
"We have felt a rising interest for breeding and genetics from both Norwegian and foreign actors. When we at last decided to open up for a sale of AFGC it was important to find an environment that best secured a further development of the company's existing organisation and competence", write the two investors.
Deja vu
The acquisition of AFGC gives Paul Midtlyng, who researched for VESO 1995 – 2008, and who now heads Aquamedic AS, a feeling of deja vu.
"In my view it follows a well-known pattern where upstarts in which the government has a dominating stake, after a while is taken over by private companies, who in their turn gilds their assets 5-10 times when they sell it on to financial investors. Economically and politically spoken the same happened with Cermaq and with EWOS", writes Midtlyng in an E-mail to Blue Frontier Magazine.