Encourage Capital, which spent the last few years developing blueprints for investments in sustainable seafood, has made its first such an investment, through a new holding company backed by $10 million from the next generation of the billionaire Walton family.
The new holding company, Pescador Holdings, has taken a stake in Geomar, based in Santiago, Chile, a vertically integrated seafood company, which works with more than 700 small fishers and then transports and cans the products for sale to retail distributors.
“We're investing in seafood businesses that are meeting the growing and almost insatiable demand for sustainable seafood from consumers,” Jason Scott, co-managing partner of Encourage, told ImpactAlpha at the Economist magazine's impact investing conference, where the deal was announced.
Geomar calls itself a “shore to shelf” sustainable seafood company. It employs 150 people, mostly women from the local community in semi-skilled seafood processing roles. The Geomar investment aligns with the thesis Encourage laid out in blueprints for how to recover the lost economic value in coastal fisheries through good fisheries management that restores both ocean ecosystems and local livelihoods. The blueprints were developed as part of the Vibrant Oceans Initiative backed by Bloomberg Philanthropies and The Rockefeller Foundation(see, “Save the Oceans, Feed the World, Make a Profit?“).
Encourage identified Geomar near the end of that research. “They were already doing some of the things we had identified, but they needed capital to do more of it,” Scott said. “We're looking for companies that have access to a long-term secure supply of sustainable seafood. And have ability to vertically integrate the supply chain to take waste and inefficiency out of the system. And share some of that savings with the fishers and fishing communities. And encourage them to fish better, and fish less if they need to do that to recover the fisheries.”
Pescador is backed by an initial $10 million from Zoma Capital, the family investment office of Ben and Lucy Ana Walton. Holding companies are permanently capitalized vehicles that can take long-term stakes in companies. They represent an alternative to venture-capital style private equity funds, in which shorter time horizons make it difficult to deliver real social and environmental benefits.
The recovery of fisheries is by necessity a longer term investment. In some cases, fishers must forego some or all of their catch in the short term in order to raise the sustainable level of harvest in the longer run. Scott calls this “the J-curve of biological IRR,” in the same way some investment funds may experience a short-term drop before seeing an increase in the value of their portfolios (See, “Is the Recovery of Wild Fisheries the New J-Curve for Impact Investors?“).
Melissa Cheong, Zoma's chief investment officer said in a statement that Pescador's strategy “will allow companies and ecosystems to meet their full financial and productivity potential by aligning the time frame of investments with the time frame of sustainably managed biological systems.”
Javier Denoso, CEO of Geomar, said the investment “will increase regional employment in Chile, (and) increase the volume and quality of sustainable seafood sourced from fisherman.”
Photo credit: Charlotte Coneybeer