Guyana firm taps equity markets to build fish, plant farm; eyes eventual strategic sale

The Carana Agribusiness aquaculture farm in Guyana.
Undercurrent News | 20 April 2015

Guyana firm taps equity markets to build fish, plant farm; eyes eventual strategic sale

by Matt Whittaker   

Carana Agribusiness is tapping capital markets to scale up farming operations in Guyana with the aim to send pacu, peppers and passion fruit to markets in the United States, Caribbean and European Union.

The spinoff of Virginia-based emerging market project developer CARANA Corp. has raised $300,000 of $1.225 million in a first round equity raise it plans to use to build its holdings up to around 120 acres of fish and plant farming land. It anticipates another round to enable it to reach 500 acres.

After raising $200,000 in seed capital last year, the company completed an initial 30-acre aquaculture farm and stocked it with tambaqui, also known as pacu, that will be ready for market by July and could bring in revenue of $250,000, the company said in documents on the startup investment forum AgFunder.

The company is looking beyond local demand for the fish, which can be met with a 60- to 80- acre farm.

“Globally we have begun discussions with seafood distributors in the United States to start marketing our product,” CEO Patrick Henry said on a webinar last month for investors, adding that the company has wholesale buyers in Guyana and regional buyers through a partner in Suriname.

The company has also prepared around 30 acres of land and infrastructure for planting peppers, which will also be ready for market in July and could fetch $400,000. Carana will also grow passion fruit.

The first round of financing is part of a larger goal of raising $3.5-$4m in two tranches this year, developing the next 200-300 acres of plant and fish farms and generating more than $1m in sales.

Next year, the plan is to have 500 acres under cultivation evenly divided between fish and plants and boost sales to $5m. Carana is projecting $7.5m in sales in 2017.

A second phase of development would target 6,000 acres, and phase three could see extension into crops like cocoa.

Eventually, Carana plans to seek to be acquired by strategic buyers like Southern Specialties or J&C Tropicals, or a middle market private equity fund focusing on agriculture or food such as Gladstone, Grupo Safra or Aqua-Spark.

Other options would be a recapitalization or equity buyback.

Anticipated revenue for 500 acres would be more than $8m with earnings before interest, taxes, depreciation and amortization of around $2.5m, while 6,000 acres could boost sales to $35m, Henry said.

Comparable industry valuations indicate the company could eventually have a value of $17m-$24m, he said.

Carana is targeting a five-year time frame for an investor exit, “but a strategic buyer may be found before that time,” he said.

Pacu, which converts feed to fish flesh efficiently, is a white fish that is popular in Brazil, has won awards in Europe and is turned into sushi grade by a Japanese processor in Suriname, he said.

Resembling cod in taste and texture, the fish was introduced to the US through the last World Cup, he said.

The company’s pacu is grown to international traceabilty standards, and the company says it has implemented quality and control regimes to ensure its farmers and contract growers meet the standards for their products gaining entry into the United States and European Union.

Moving into the US or EU markets means having to compete at world market prices, so the company will focus on managing farming methods and using technology to reduce costs, Henry said.
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