Luxembourg-based private equity fund Ocean 14 Capital is gearing up for its first investments, with a focus on aquaculture, fisheries and technology companies that can balance both a positive environmental impact and solid financial returns.
The newly established firm, born out of executives from Vedra Partners, Pontos Aqua and the Blue Marine Foundation, raised €80 million ($90.6 million) in the first close of its inaugural fund in December.
Current cornerstone investors include the European Investment Fund, Danish group Chr. Augustinus Frabrikker, Australia-based Minderoo Foundation and Walton family-backed Builders Vision’s Rising Tides Fund. Out of the €80 million ($90.6 million) raised, European Investment Bank invested €35 million ($39.6 million).
The fund plans a final close later this year, targeting €150 million ($169.8 million) in total. With that money, the company will be the largest ocean-focused impact fund, the founders claim.
The capital will be spent across 20-25 companies, half of which will be spent on companies with high growth potentials. Twenty percent of the funds are earmarked for late-stage ventures. The remainder of the capital will be used as follow-on capital to its existing investments requiring further investments.
Some of the acquired business may be merged, with the view of building data-led, technology enabled and circular scalable groups.
Sustainability isn't an option
Ocean 14 Capital is targeting primarily Europe-based aquaculture companies, sustainable fisheries that want to scale or need new technology, alternative protein companies, plastic recycling service companies, and companies focused on the seaweed market.
Despite having 600 deals in its pipeline and active discussions with 20 companies, the firm is looking for more targets.
“We are looking for the best business out there,” Ocean 14 Capital’s founding partner Chris Gorell Barnes told IntraFish.
The investment firm expects to close two or three deals this quarter and eight throughout the course of the year.
Ocean 14 is targeting an active minority stake -- between 25-49 percent -- and seats on the board in exchange for support such as capital, connections, help with increasing profit margins and brand creation.
Ocean 14 Capital’s inaugural fund has a life span of 10 years, and some investments may be held through the duration of the fund. On average, however, each company will be held between 5-10 years.
Gorell Barnes said the team's experience has helped them understand that "in aquaculture quick fixes are often not possible."
Emerging Blue Economy
There are several emerging macro-level trends that will help the blue economy gain more significance in the coming years.
An increasing number of companies operating in the space are likely to become more sophisticated and profitable because of more access to capital, increasing consumer demand and government regulations.
“Increased valuation across many parts of the sector will follow, and individual companies will continue to see a widened price gap between, for example, sustainable fish and non-sustainable,” Gorell Barnes said.
Beside financial targets, Ocean 14 Capital also measures its investment based on its sustainable impact, Gorell Barnes said.
For measuring green impacts, Ocean 14 Capital uses its impact committee for guidance alongside various impact measurement methodologies and technologies, including a metrics tool from which it can validate a company’s environmental footprint and assess it against a sector benchmark.
Return on impact
The investors are a unique mix with a shared focus on sustainable oceans. The European Investment Bank is the first sovereign wealth fund that has invested in an ocean-focused fund, Gorell Barnes said.
The European Investment Fund investment is guaranteed by the European Fund for Strategic Investments and falls under BlueInvest, which is a European Commission initiative created in 2020 focusing on the blue economy.
Builders Vision invested in Ocean 14 Capital because it shares similar focus areas, Builders Vision’s Senior Program Officer Peter Bryant told IntraFish.
The fact that Ocean 14 Capital also focuses on later-stage companies complement Builders Vision well, since it typically focuses on early-stage companies, Bryant said.
Builders Vision invested $5 million (€4.4 million) in the first close, which was its maximum allowed commitment. It may potentially be able to invest further in the second close, Bryant added.
