Raw or Poached? Salmon's on Menu for $2 Billion Hedge Fund

(Bloomberg) -- As the world strives for a more healthy diet, one hedge fund in Australia is developing a keen appetite for salmon.

Tribeca Investment Partners Pty, a Sydney-based manager, runs two natural resource funds focused on everything from gas to battery minerals, and is now looking to raise $500 million for a strategy to invest in the sector’s corporate debt. Among various targets, the firm is seeking opportunities to lend to or invest in salmon producers as people in developed nations become increasingly health conscious and put more fish on their tables.

“We see a big change in diets across the G-20, including the middle class in China,” Ben Cleary, Asia chief executive officer, said in an interview in Singapore. “The salmon market’s got some interesting dynamics, and it has had very strong growth in the last three years. Salmon’s part of our broader interest in diets and agriculture.” Tribeca manages over $2.3 billion of assets.

Raw or Poached? Salmon's on Menu for $2 Billion Hedge Fund

Global consumption of fresh fish and seafood has climbed steadily in recent years, and is seen reaching 122 million metric tons in 2022 from 111 million this year, Euromonitor data show, as people eat more fish because of the perceived health benefits. While demand for fish has risen, red meat consumption has suffered, according to the report.

The salmon market’s also attractive because of high entry barriers, which may bring bigger margins, said Cleary. The firm has already invested in salmon producers, as well as octopus and prawn farming. The global natural resources long-short strategy fund posted a 30 percent compound annual growth rate of return over five years, while its credit strategy reported 17 percent gains since its inception in 2018, despite a generally torrid year in global markets.

Raw or Poached? Salmon's on Menu for $2 Billion Hedge Fund

Good Fit

As for the new $500 million fund that focuses on securitized lending, the firm’s targeting deals in the $50 million to $100 million range, and eyeing opportunities from Australia to North America, said Haydn Smith, co-manager with Cleary. The fund’s already raised $100 million, he said.

“Banks have been forced to pull back from lending in general, but particularly in natural resources,” Smith said by phone from Sydney. “Natural resources is having a bit of a capital vacuum, and so the opportunity is clearly there.” Still, banks continue to be “reasonably active” in gold mining, said Cleary.

Among commodities, agriculture’s a good fit for Tribeca as there’s less competition from banks. “We know from history that anything that’s alive is hard for private equity, or for banks, to get their heads around,” said Cleary, citing uncertainties such as seasonality and weather.

More generally, with the change to healthier diets, people are becoming much more discerning. In coffee for instance, “you want to know whether beans came from free trade, what’s your barista’s name, all these things,” he said.

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