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Fishing in chartered waters

‘We knew future growth in South Africa would be limited by regulation’ – Oceana CEO.

Imraan Soomra, the recently appointed CEO of Oceana, sees his diverse career experience in the sport, broadcasting and hospital industries as providing valuable insights to his current position.

These are all highly regulated industries, like the fishing industry, and Soomra is currently navigating the treacherous waters of quota re-negotiation. Namibian authorities recently announced they would not allocate rights to listed companies. And in South Africa the department of agriculture, forestry and fisheries is preparing to reallocate rights in 2020. Fortunately, Soomra is no stranger to the process, having served as Oceana’s CFO for the last five years.

“I understand what the Namibian government is doing. In any geography you want to give fishing rights to citizens, it’s the right thing to do. At the same time, the industry must create jobs, create positive flows to the fiscus, and ensure the sustainability of the industry. You must hold those with rights accountable. That is always the debate.”

In South Africa, he says the debate will be about new entrants. As far as he is concerned the answer is a definite yes. The question then is how much do you allocate and what role should the existing industry play in ensuring the success of the new quota holders. “I am not in favour of paper rights holders. They must be involved and the industry needs to support them – perhaps to secure a share in a vessel, for example – so that at the end of 10 years they have a stake in the industry. I’m not in favour of allocating rights to people with no interest in fishing.” He recognises that this process is fraught with politics but notes drily that the industry too needs an incentive, beyond the obvious moral and ethical one, to do the right thing.

Soomra knows all about rights, having been CFO at SuperSport and later M-Net shortly after South Africa won the bid to host the Soccer World Cup. He thrived in the entrepreneurial culture created by Naspers chairman Koos Bekker but left for greener pastures at hospital group Netcare.

“I know it seems odd, but I saw it as a calling – I wanted to play a leadership role in any organisation that was making a difference to South African lives.” If the Naspers group helped him appreciate the benefits of an entrepreneurial culture, Netcare taught him the virtues of good, strong financial disciplines.

Soomra joined Oceana in 2013. “I clicked with Francois [Kuttel, former CEO]. He was not afraid to impart his knowledge; he also made it clear that he did not want to be CEO for two decades. If I proved myself, I had an equal chance as any at the top job.”

At the time Oceana, which was and is the largest fishing company in South Africa, generated revenue of R5 billion from its fishing operations, which were localised in South Africa and Namibia, and the export of canned fish, fishmeal and fish oil products as well as lobster to markets in southern and West Africa, Europe and the Far East.

It was also on the cusp of change. “The acquisition of Foodcorp’s fishing business [now renamed Amawandle Hake] was fraught and it made us aware that future growth in South Africa would be limited by regulation. We knew we had the capacity to go global, and that is how the journey began.”

The search for growth saw Oceana invest $13 million in new fishmeal and fish oil facilities in Angola and Namibia in 2015. The company also secured a supply of frozen pilchards from Morocco, Mauritania and Japan, following a decrease in its quota in 2016. This keeps its canning facilities on the West Coast busy and secures 2 300 jobs.

In July 2016, Oceana closed a ‘game-changer’ transaction in the global fishmeal sector with its $382.3 million purchase of Daybrook Fisheries in Louisiana.

Today Oceana is the largest fishing company in Africa and is ranked as one of the top 10 seafood companies in the world by market capitalisation, revenue growth, share price performance and Ebitda (earnings before interest, tax, depreciation and amortisation). Of its R6.8 billion revenue, some 47% is derived offshore, 17% of it from the US.

So where to for Oceana and Soomra?

Oceana celebrated its 100th anniversary this year, quite a milestone for a company that started out canning kreef in Lambert’s Bay. In 1957 five fishing companies merged to form Oceana, giving the operation much needed scale in a capital-intensive industry.

Soomra plans to continue the journey that he began as CFO. “We have made the business more global. My role is to build on that and to continue to grow. The centenary event on the West Coast opened my eyes to what we have: a solid business and loyalty that I haven’t seen before – it’s a generational thing – mothers, children and grandchildren have worked for us.”

For the time being the focus will be on organic growth. Lucky Star, which has achieved iconic brand status in South Africa and generates 42% of revenue, is a focus. There are two prongs to the growth: geographically into new markets in Africa, and volumetrically by persuading people to eat canned fish more regularly.

Another opportunity is to expand its production of fishmeal and oil, which supply the aquaculture and nutraceutical markets. “We have access to good biomass in SA, Angola and US, where we can increase volumes and throughput,” he says.

Acquisitions are on the radar but not a priority. Driving growth from the business and consolidating the balance sheet is more pressing, says Soomra. Net debt to Ebitda has increased to 2.4 times (2016: 1.7 times), despite a reduction in debt levels from R4.1 billion to R3.2 billion. This is not a concern, and debt levels will reduce over time, he adds. “The time will come for acquisitions – perhaps within the next two to three years – so yes, we are considering various opportunities.”

He is clear that delivering growth for shareholders – in the form of dividends and share price growth – is a priority. But it cannot come at the expense of the company’s other stakeholders. As the steward of a commercial fishing operation Soomra is mindful of the many actors within South Africa’s fishing industry – from the communities whose livelihoods remain dependent on fishing to quota holders, regulators and other commercial operators – and the delicate balancing act that keeps the system functioning.

In addition to being the biggest fishing company in Africa, Oceana is one of the most empowered: 57% of senior management are black and roughly 63% of shareholders are black, with investment holding group Brimstone and Tiger Brands (majority owned by Brimstone) holding big stakes in the company. “We have shied away from showcasing who we are in last few years,” says Soomra. “But we are proud of what we have achieved – for instance, 2 483 black staff members hold 13% of the company through the Oceana Empowerment Trust. The market cap of that trust is bigger than that of Premier Fishing – making the trust SA’s largest black-owned fishing company.”

He adds that by divesting from parts of its fishing business, Oceana has created two black industrialists. “We think we can do more: where are the black marine engineers and fisheries specialists?”  His own ambition is to launch a maritime academy.

It’s clear that Oceana is much more than just a JSE-listed firm. Some 5 500 employees, their families and a multitude of smaller businesses are dependant on it for their survival.

In turn, quotas are important for Oceana’s survival. Soomra needs big shoulders.

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You and Cuttel are too close. That US deal…SAM not happy with Cuttel getting such a low
Equity at risk deal. Something not right. As for Mustaq being chairman….well…He cooks well. But let’s hope the cooking is food only

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