Founded in 1999, Asmak seeks to become the UAE's top aquaculture firm. (Photo: Asmak/FIS)
Aquaculture firm receives USD 114 mln for recovery
UNITED ARAB EMIRATES
Tuesday, January 04, 2011, 01:10 (GMT + 9)
The International Fish Farming Holding Company (Asmak) has signed an agreement with holding company Royal Group to provide Asmak with USD 114.34 million for growth purposes and to allow it to return to profit.
Abu Dhabi-based Royal will buy two-year convertible bonds from Asmak, said a 29 December filing to the Abu Dhabi Securities Exchange.
"Our strategy is to expand what we are already doing - aquaculture and fisheries - but also to expand into new areas so we can obtain sustainable profit for our shareholders," said Asmak Vice Chairman Mohammed Helal al Muhairi.
He said Asmak would also use the capital to acquire firms to boost its profit and let it award dividends. Its largest single shareholder is development company Hydra Properties, fully owned by Royal, which has a 47 per cent stake, reports The National.
When the convertible bond matures in two years, Royal Group could become a major shareholder.
At first, Asmak focused on constructing farms in the United Arab Emirates (UAE), but in 2009 it discontinued operations there and in Oman due to red tides.
Currently, the company focuses on the less lucrative business of sourcing fish worldwide for local supermarkets and catering firms. Originally, the company was launched by the UAE Offsets Group with capital given by Dassault Aviation after UAE acquired Dassault's Mirage fighters.
Even though the country mandates that defence and aerospace companies engaged with it must develop projects that add to other sectors of the economy to a value equivalent to 60 per cent of the value of their contracts, Asmak has had trouble achieving sustained earnings. It posted a AED 1.38 million (USD 375,612) loss for Q3 2010 versus a AED 2.55 million (USD 694,066) loss in Q3 2009.
In early 2008, Asmak established a subsidiary, Emirates Stallions Properties, in an effort to profit from the property boom, investing AED 140 million (USD 38.1 million) on four plots of land and AED 35 million (USD 9.5 million) on other property, not yet fully paid.
Jean-Yves Mevel, a manager for a fish farming venture from Saudi Arabia-based Al Bayan Holding Company, said the region had tremendous potential for aquaculture due to the area’s warm waters, which fish to mature rapidly.
However, he noted that the business was especially tricky and took a long time to become profitable.
"A lot of licences are given across the region, but they are taken away again because [operators] don't do anything or they give up," he added.
Founded in 1999, Asmak seeks to become the UAE's top aquaculture firm and gradually swell its operation throughout the Arabian Gulf and the globe.
It aims to produce, process and market quality fish and fish products at competitive prices in the domestic market and to establish itself as the region’s chief seafood exporter, while maintaining an environmentally friendly and sustainable production.
By Natalia Real
Photo Courtesy of FIS Member ASMAK - International Fish Farming Holding Company (P.J.S.C.)