FISHING: Lonrho Starts To Fish In Cape Town
Recent Western Cape Business News
FOL – started in the late nineties - is operated by Roelf Brink and Ernie Malan, who both have extensive operating experience and existing investments (Chapman’s Peak Fish Processing and SA Sardine Exporters) in the local fishing sector.
The company owns bulk storage and fish processing facilities and sources a variety of seafood for mainly the catering and retail sector from international purchase platforms that include South America, Africa, Europe and the Middle and Far East.
Popular products handled by FOL include prawns, salmon, pangasius, hake and kingklip. The company is also a supplier of bait to hake and large pelagic fleets.
Despite securing a controlling stake in FOL Lonrho reassured that the existing management team would remain in place not only to develop and grow the company but also to add depth to the management expertise available to Lonrho’s existing seafood division.
Lonrho – which holds infrastructure, industrial, leisure, food, transport and technology assets throughout Africa – broke into the seafood market in 2010 when it acquired a 51% stake in Oceanfresh Seafoods for roughly R40 million.
Oceanfresh is also a producer and supplier of seafood – mainly lobsters and prawns as well as ‘fin fish’ from Mozambique and SA.
FOL will add bulk to Lonrho’s fledgling fishing endeavours. FOL generated turnover of some R66 million in the year to end February 2011 and managed pre-tax profits of R1.7 million.
It seems Lonrho sees much potential in FOL, and has significantly secured an option on buying the remaining 49% of the business after three years. This deal will be based on a price fixed to a six times earnings multiple of the company’s pre-tax earnings in the 2014 financial year or a maximum price of R35 million.
Lonrho’s executive chairman David Lenigas believes FOL will bring strong synergies with Lonrho‘s current retail focused activities in the sector both in the African and global markets.
CBN wonders whether FOL will score extra international business from its links with Lonrho, remembering that Oceanfresh had in 2010 successfully completed a trial programme to commence exports to the USA retail market with leading US retailer Costco.
CBN also wonders how far Lonrho’s fishing ambitions stretch. For instance, would Lonrho – which has a market capitalisation of nearly R1.8 billion – look at one of the major fishing companies.
Perhaps Premier Fishing, which is controlled by Sekunjalo Investments, would be the most suitable fit considering its upper end product range in West Coast and South Coast lobster. Or perhaps seafood distributor Lusitania, which CBN thinks is still owned by East London transport tycoon Tony Cotterell, would be an easier acquisition to digest at this point?
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