Pacific Andes

Aktivs

As of May 2014, Pacific Andes is the world's largest producer of fish fillet. Headquartered in Hong Kong, the holding is controlled by the Nge family of local entrepreneurs.

The company's assets include China Fishery.

Business in Russia

2012:60% of fish production falls on the Far East, FAS restrictions

In 2012, in one of its investment memoranda, Pacific Andes reported that about 60% of its fish production was in the Russian Far East. After that, Rosrybolovstvo asked law enforcement agencies to check the legality of Pacific Andes' work in Russia, since Russian law prohibits foreign companies from fishing in Russia's exclusive economic zone. The Russian government distributed catch quotas among domestic fishermen in 2008 for a period of ten years.

At the end of 2012 The Federal Antimonopoly Service of Russia (FAS) demanded that Pacific Andes sell its Russian fishing assets. According to the Russian department, Pacific Andes acquired shares in Russian companies not through a mechanism for owning shares, but through "secret agreements," and Russian structures were only nominal owners of quotas for catching marine biological resources. The head of the FAS Igor Artemyev threatened the Chinese with criminal prosecution in case of refusal to comply with the order of the antimonopoly department.

2013: Sale of Russian Sea assets

In January and May 2013, four fishing companies, which, according to the FAS, are controlled by the Chinese, were acquired for $540 million by the Russian Sea - Dobycha (RMD) company, owned by the brother of the Governor of the Moscow Region Maxim Vorobyov and the son of the ex-Minister of Transport and son-in-law Gennady Timchenko Gleb Frank. As a result, RMD, through acquired companies, received 13% of the all-Russian quota for pollock catch, which corresponds to 180 thousand tons of fish per year. According to the results of 2013 RMD sold pollock for $139 million with a total revenue of $170 million.

In October 2013 The FAS allowed Russian Sea - Dobycha to buy two more companies that were suspected of being affiliated with foreigners. However, the deal for May 2014 has not yet taken place.

"The negotiations, unfortunately, dragged on a lot, and, from our point of view, through no our fault," Ilya Vlasenko, a representative of the RMD, commented on the failed deal to RBC.

2014: Reduced production in Russia

In May 2014, it became known that Pacific Andes was curtailing its presence in the Russian market. Over the previous two years, the Chinese have halved revenues from Russian pollock products and, as analysts predict, may completely switch to working with fishermen from other countries in the medium term. With the departure of the Chinese fish giant, the positions of the Russian Sea - Dobycha company Maxim Vorobyov and Gleb Frank are growing stronger in the region.

In the first half of fiscal year 2014 (ended March 28), China Fishery, which is part of the Pacific Andes group, reduced revenue from sales of Russian pollock products by 53% to $105.3 million compared to the same period of the previous fiscal year, the company said. At the same time, Chinese fishers increased sales of fish caught in Peru by 540% to $203.5 million. Pacific Andes' total revenue for the six months of the fiscal year rose 20.1% to $325.1 million.

Analysts from Moody's agency, commenting on the reports, predict that China Fishery will continue to reduce production from Russian fish, since its strategy provides for a complete exit from business in this region. The Chinese themselves do not hide such plans: in March 2014, China Fishery announced that it was refusing to work with Russian fishing companies under long-term contracts and was switching to buying fish from the spot market.

At the same time, one of the participants in the fish market told RBC that Russian fishermen continue to sell fish to Chinese buyers, behind whom, according to the fishermen themselves, is Pacific Andes^[1].

"I think this company did not abandon Russian fish, but simply changed the procurement scheme. This is too profitable a business to give up, "said the interlocutor of RBC

The profitability EBITDA for the Russian division of Pacific Andes is 45%, while the margin of the Peruvian business is 35%, analysts at Moody's say.

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