PACIFIC TUNA FORUM 2017 6th Regional Tuna Industry and Trade Conference

Fostering Greater Social, Economic and Financial Benefits to the Pacific

13 -14 September 2017 | Port Moresby, PNG

Discussion Possibilities of Investing in the Fisheries Sector

by Superfunds and Financial Institutions

Mike Wate Deputy General Manager

SINPF

“

A Country Experience Solomon Islands National Provident Fund Board

(SINPFB) Investing in Soltuna Limited –Producer of tuna

loins, canned tuna products and other byproducts”

Soltuna Facility, Located at Noro, Western Province, SI.

Fisheries Contribution to Solomon Islands Economy

• 19% of Solomon Islands gross domestic product (GDP)

• Employing an estimated more than 2,500 Solomon Islander in direct full time employment

• Provides government revenue through taxes & licenses

• Earning foreign exchange from exports of frozen tuna loins, canned tuna products and round fish

• Creating demand for supporting economic and business activities that provides goods and services to the

fishing and processing industry

Fisheries Contribution to Solomon Islands Economy (Continue)

• Attracts foreign direct investment (FDI)

• Provoking new investments in infrastructure - ports, roads, telecommunications etc.

• Providing opportunities to expand technical and management skill sets across processing, fishing and supporting industry sectors, and;

• Stimulating regional economic and social development

Solomon Islands National Provident Fund • A retirement fund created by an Act of Parliament

by the Solomon Islands Government for all paid employees

• More than 40 years old

• Uniquely placed as a long term national investor in local business and infrastructure investments, and;

• Limited international investments

Understanding the investment opportunity in Soltuna Ltd • Owned and operate a 120 ton/day capacity tuna

cannery

• Access to adequate tuna supply for processing

• Proven track record in sustainable harvesting and processing of tuna

• Strong brand for its canned tuna products in Solomon Islands and in the region

• Duty free access to the EU market

• Adequate compliance to EU regulations on health, food quality and safety standards

Understanding the investment opportunity in Soltuna Ltd (continue)

• Fish supply agreement with National Fisheries Development (NFD) (a locally incorporated fishing company owned by global tuna company Tri Marine International)

• NFD fishing boats EU compliant and certified

•Commitment of Tri Marine to buy loins for export to the EU and the USA markets

• Recipient of foreign capital in terms of Foreign Direct Investment (FDI) and later official capital IFC/World Bank

Understanding the investment opportunity in Soltuna Ltd (continue)

• A strong key player in the country’s fishing industry and the economy,

• Together with NFD form basically the tuna industry in Solomon Islands with other fishing companies and a loin factory, and;

• Support from the Solomon Island Government regarding; (i) access to Solomon Island fishing grounds and (ii) maintaining sanitary and fisheries authorities recognized as competent by the EU- a key market for the Solomon Islands tuna industry

Understanding the investment risks (some risks are inherent due to location and distance)

• Shipping challenges (freight cost and frequency)

• Small size of the plant – economies of scale

• Aging assets and infrastructure •

• High cost of utilities and material inputs – (compared to competitors in Asia)

• Volatility of fish catches •

• Volatility of tuna prices •

• Local labor supply challenges – cost, availability, and turnover

• A rigid tax regime including a goods tax on inputs

SINPF Evaluation • The restructure of the wholly government owned

company

• To partner with Tri Marine International, with extensive investments, experience, proven track record in fishing, processing and marketing of tuna products

• Post restructure potential long term investment returns from interest, dividends and capital appreciation that meets our risk return appetite and requirement

• Processing tuna locally provides more economic value to the country

• Additional direct and indirect employment with bias for women direct employment

SINPF Evaluation (continue)

• Increasing NPF contributions from new employees

• A strategic investment that supports one of our country’s key industries and SINPF investment

• An opportunity to grow Solomon Islands exports to the EU and canned tuna products to regional markets of Fiji, PNG, Vanuatu, and Kiribati.

• The IFC loan brought financial governance credibility to the company and country through compliance to the Multi lateral Financial Institution’s global standards, and;

SINPF Evaluation (continue)

• Supports Solomon Islands regional and rural development – diversifying economic growth out of the capital Honiara.

SINPF Investment

• Equity 1) 40.5% shareholding (Tri Marine

51% and balance government) • Debt

1) Convertible 5 year bond 2) 10 year long term debt (Pari

Passu with International Finance Company (IFC) long term debt)

Soltuna Investment Performance

• Total Return (equity and loan) (2017 FY) o 9.3%

• Total employment (cannery labor intensive) o 2,000 direct employees

• Total annual contribution revenue o SBD$5.74 million

• Strategic income for SINPF owned fuel company o 25% of fuel co.’s gross revenue

Female Cannery Workers

NFD Vessels

Tenk yu tru