It was something of a gold standard. Cheap and extremely efficient financing. The pioneer was, here too, the Atlantic Sapphire.
The idea was to go to the financial market with a vision. A vision to be able to produce salmon on land without expensive licenses, lice and escapes. Paired with a sale that the RAS technology has now become so advanced that one can ignore previous decades’ loss projects on land.
So, after one has put in place all the permits and put the shovel in the ground; get more money. On rising prices. One is closer to realization.
Again, when the tanks are ready and one has hatched the first roe, pick up some more. Again on higher prices. This is going as planned. You do not need all the money at once.
The risk so far is negligible. Just like building and operating any smolt plant. Known technology. The risk in land-based salmon normally comes first in the ongrowing period.
They have all used this template. Salmon Evolution, Gigante Salmon, Andfjord Salmon, Nordic Aquafarms, Nordic Aqua Partners, Columbi Salmon, Smart Salmon and Proximar Seafood.
And more are queuing up to do the same. Including West Coast Salmon, Taste of BC Aquafarms, Pure Salmon, Maiken Food and Viking Aqua – to name a few.
The challenge only emerges as the share prices of the locomotives begin to fall. Especially then “The first mover” Atlantic Sapphire, as a function of biological challenges and problems in the ongrowing.
The fact is that all listed companies engaged in land-based salmon farming have fallen in value this year. There is only one honorable exception; Salmon Evolution. Some, such as Proximar Seafood, AquaBounty and the aforementioned Atlantic Sapphire, have been hit quite hard.
Unlike almost everyone else, Atlantic Sapphire has fish in their tanks and real aquaculture production. And when it turns out that this is not at all as risk-free as one has got the impression from the equity sale, both from them and others, the uncertainty spreads among the investors. They want a higher risk premium, a share price that reflects that it is not nail production or real estate rental that one is doing.
It is precisely this realization that it has now become significantly more difficult to raise money for salmon on land, which has meant that both Nordic Aquafarms and Taste of BC Aquafarms have in the last week launched a frontal attack on the grandiose investment of market leader Atlantic Sapphire.
The latter defend themselves as best they can. But rhetoric, explanations and argumentation are only a step in the right direction. When it comes down to it, Atlantic Sapphire must show in action that they master what both they and other land-based farmers want to: Produce high-quality salmon at competitive costs. The proof of the pudding is in the eating.
They are frustrated, naturally enough, but yelling at a major competitor is unlikely to strengthen investor confidence in these projects. The eye of the needle has become narrower. If they do not find alternative financing strategies, the road to 2.4 million tonnes of salmon on land could be considerably longer and more time-consuming than it looked a few months ago.