£19m placing for biotech firm to fund JV with Chilean company

AIM-listed Sheffield biotech firm Benchmark Holdings has announced a placing of shares to raise £19m, which will fund a Salmon breeding and genetic joint venture with a Chilean company.

The firm is looking to complete the deal with Empresas AquaChile S.A. The acquisition will give Benchmark a 49% stake in a “strategically important” Chilean salmon breeding and genetics JV for a total cash consideration of £12.2m.

Benchmark said the deal would accelerate and de-risk its strategy in Chile, the world’s second largest salmon market, where Benchmark currently has a limited presence. It will see the firm partnering with Aquachile, the world’s sixth largest salmonid producer, and the largest in Chile

The placing with existing and new investors is expected to  raise £19m (before expenses) to fund the total cash consideration of £12.2m, a £4m loan to the JV and transaction expenses, with the balance being used for general working capital purposes.

Benchmark is on track to meet its expectations for the year ending 30 September 2018 with strong first half performances.

 Malcolm Pye, chief executive, said: “We are very pleased to announce our Chilean joint venture, which will help us accelerate and de-risk our growth strategy in Chile, the world’s second largest salmon market, where we are underrepresented. Furthermore, the JV is expected to deliver attractive returns and be immediately earnings accretive.

“Combining AquaChile’s existing high quality land-based production and locally adapted genetics, with Benchmark’s breeding and genetics capabilities and IP,  we believe, will create a world class operation. The flexibility to use our facilities in Iceland to support the JV gives us a strong competitive advantage in the market.

“We are also delighted to have received strong support from both new and existing institutional investors for the Placing, which was well subscribed.

“Following a good first half performance, we are on track to meet our expectations for the current financial year. The continued growing global demand for aquaculture products, combined with the disease challenges faced by the industry, puts us in a strong position to drive attractive growth and returns in the  years to come.”