VENTURES: Premier Fishing Is Angling Aggressively
Recent Western Cape Business News
THE hunted, it seems, has become the hunter. Premier Fishing, which is controlled by empowerment group Sekunjalo, has over the last three years been regarded as bait for one of the other three big fishing companies – Oceana, Irvin & Johnson and Sea Harvest.
Some have even speculated that Brian Joffe’s Bidvest – which has a growing fishing division – could be a possible suitor for Premier.
What might have also fuelled speculation that Premier was readying itself for sale were rumours – that may have emanated from union sources or rival fishing concerns – that the company was perhaps looking to take a more passive role in the fishing sector.
This would have entailed Premier taking the role as a quota holder rather than a fishing enterprise by ‘farming out’ for a fee its quotas to other operators.
CBN has correspondence sent to COSATU’s fishing desk which suggests that Sekunjalo is in the process of transferring its West Coast Rock Lobster Division to Oceana and that Premier’s South Coast Rock Lobster Division’s quota outsourced to the Ruwekus Group or the Lusitania Group.
Sekunjalo has denied vehemently that this is the plan for Premier – which comprises by far the biggest segment of the empowerment company’s value and represents its biggest profit earner.
It seems quite the opposite is unfolding at Premier, which has gone on the record with its determination to ‘aggressively grow’ its business by looking at acquisitions and joint venture partnerships.
From what CBN understands, Premier has been talking to the Silverman family (who also used to be well known in the fruit exporting industry via WB Holdings) around taking a significant stake in West Point Fishing.
Neither Sekunjalo or Premier have made official comment on such a deal. But Premier probably can afford to make a few bolt-on acquisitions, which would ultimately broaden its sphere of operations away from its traditional strength in south and west coast lobster. The other possible deal that has long been doing the rounds is that Premier may look at buying seafood processing, storage and distribution company Lusitania Food Products from King Consolidated Holdings. Lusitania has a troubled history, and has not managed profits for the last few years.
But perhaps a well priced bid would allow Premier to profitably reorganise Lusitania into its food chain with an eye on brand building.
One suspects, though, that Premier could be much more successful in wooing any number of smaller quota holders into its net – especially in tighter trading conditions where a financially muscular partner can afford to keep operations afloat.
If Premier – which is part of a genuinely empowered corporate entity – can successfully snag a few smaller quota deals the company may become a ‘default option’ for smaller fishing concerns. Buying into smaller businesses/quota holders gradually would allow Premier to easily assimilate new ventures without the risk of serious indigestion. Interestingly, Sekunjalo built a highly profitable technology division by following a similar ‘low risk’ tack…
A steady bulking up of Premier will also give Sekunjalo the option (when investment conditions improve) of listing the fishing company on the JSE – an exercise that could raise fresh funding by issuing new shares to investors.
The talk around Sekunjalo is that Premier’s profits could be doubled by the 2010 financial year.
Last year Premier managed about R35 million in profits, an achievement that the company is unlikely to repeat this financial year as export markets for lobster were probably adversely affected by the global financial meltdown. It seems that Premier’s south coast lobster business – which exports to the US – has taken some strain.
But there has been a strong commitment by Sekunjalo (and this is why trade unions are looking a tad edgy) to take out costs in the business. The suggestion is that Sekunjalo wants Premier to deliver between R80 million to R90 million in profits in 2011 – a performance that would justify long standing notions that Premier is really worth around R750 million to R800 million.
Over and above that valuation is the investment Premier has made in aquaculture – a side line business that perhaps should not be under-estimated in the long term. Aquaculture, of course, could be an area where Premier can secure a few more acquisitions and build production capacity in abalone.
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