Investments for Fisheries Sustainability – Applications in the Russian Far East

Sea Change Investment FundEnvironmentally-Driven Venture Fund

$20 million dollar fund capitalized by a program-related investment from the David and Lucile Packard Foundation, matched by a private equity investment.

Targets the middle of the seafood supply chain

Focuses solely on environmentally-preferable seafood

Uniquely blends philanthropic and private capital

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Cost: $2.00/lbMarket value: $4.00/lb

Market price: $1.80/lb

Cost: $0.25/lbMarket value: $1.80/lb

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US fisheries

US aquaculture

Foreign fisheries

Foreignaquaculture

US primary processors

US secondary processors

Foreign primary processors

Foreign secondary processors

Seafood wholesalers / distributors

Supermarkets

Fish markets

Restaurants

Hotels

Institutions

Consu

mers ($

63

B in

purch

ase

s)

SUPPLY PROCESSING MARKETING & DISTRIBUTION

RETAIL

ProductDevelopers

Brokers and traders

Importers

Broadline distributors

Sea Change Investment FundPartial Portfolio

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EcoFish supplies and markets seafood exclusively from environmentally sustainable sources. All of the company's products are vetted and approved by a panel of fishery conservation experts. The company sells fresh seafood to over 125 upscale restaurants and frozen seafood entrees to over 1,200 gourmet and natural foods stores.

September, 2005

Organic Bistro Whole Life MealsTM, are a line of nutritiously rich, gourmet frozen meals. Certified organic, each meal is designed to maximize its ingredient mix for lean protein, fiber, omega-3s and complex carbohydrates to provide a balanced, whole meal. Callaway's support for organic agriculture is complemented by its strong commitment to sustainable seafood.

September, 2006

Sea Change Investment FundTypical Conservation Terms

Sustainable seafood sourcing policy – Company makes

sustainability of its seafood an explicit component of

company policy. Elements typically include:

Product vetting process that allows the company flexibility in its approach

(e.g. advisory panel, defined standards, outside consultant)

Commitment to Marine Stewardship Council (MSC); chain of custody

certification and product labeling

Commitment to best farmed products, as defined by Monterey Bay

Aquarium standards

Communications standards

Sea Change Investment FundTypical Investment Terms

Sea Change typically seeks to structure standard

convertible preferred securities, including features

such as: Dividends

Liquidation preference

Anti-dilution provisions

Optional conversion

Board seat(s)

Registration rights

ROFR / co-Sale rights

Drag-along rights

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Specialty Canned Products

EcoFish

Wild Planet

American Tuna

Dave's Albacore

G'Day Gourmet

Laguna Tuna

Specialty Tuna

Conventional Canned Products

Starkist

Bumblebee

Chicken of the Sea

Phillips

Frozen Meals/Entrees

Blue Horizon

EcoFish

Organic Bistro

World Catch

Grace's Kitchen

Saltwater Marketing

Bistro Fresh

Sojo Foods

Life Choices

Wildcatch

Triad/Bruce Gore

Banzai Sushi

Burgers

Omega Foods

Aquacuisine

Trident

Frozen Shrimp

Blue Horizon

EcoFish

Dom Organics

Contessa, etc.

Fish Sticks

Gorton’s

Van de Kamps

Ian’s

Portfolio of investments

Principal + 1% interest

Program-RelatedInvestment (PRI)

Profits – subordinated

to Packard

Investments

Profits on exit events/cash flow

Equity capital commitment

Sea Change Investment Fund

Equity Investors

The Packard Foundation

Sea Change Investment FundPotential applications in Russian fisheriesLimited direct applications given the fund’s

focus on brands, narrowly defined means of extracting value and geographic limitations

Potential indirect support through investment in US companies that “tell the story” behind sustainably-caught, high quality products

Sea Change serves as a potential model for other funds

ProFund$22 million fund (10 years)Investors saw average return of 6% on

investmentsExit strategy /opportunity to liquidate

ownership in the company was negotiated in each investment

Portfolio was soundly diversified with investments in several countries, organizational forms, market penetration, organizational maturity

California Fisheries FundManaged via partnership between

Environmental Defense and a qualified lender Capitalized first by grants, with expansion

potentially fueled by a blend of grants and debt (PRIs)

Three lending products (Fishery Foundation Loans, Infrastructure Loans, Business Loans)

Phased expansion

MicrofinanceRange of services can be broadly categorized

as the following: Financial intermediation - refers to the provision of financial products

and services, notably credit and savings. Social intermediation - the process of creating and building human and

social capital required for sustainable financial intermediation. This is an intervention strategy that helps marginalized clients connect and link up with formal financial institutions.

Business and enterprise development services - include a wide range of non-financial services and interventions that assist borrowers in running their microbusinesses.

Social services - includes non-financial services such as health, nutrition, education and literacy training that aim to improve the well-being of target groups.

Attractive Investment EnvironmentSophisticated Financial SystemPolitical WillLocal commitment and ownership Well-established legal and financial

environment

Potential Uses of CapitalTo purchase financial assets

Monitoring and enforcementTo increase the value of the product

Improved processingMarketingExposure to new markets

Create economic incentives for stewardship and add value to fishery landings