Direct Capital invests in New Zealand King Salmon

MEDIA RELEASE invest - 1

8 September 2008

Direct Capital invests in New Zealand King Salmon

Direct Capital has invested alongside management to acquire a 45 per cent shareholding in New Zealand King Salmon.

New Zealand King Salmon is the country’s biggest salmon producer supplying both the domestic and export markets. Based in Nelson and with hatcheries, farms and processing facilities across Marlborough and Canterbury, the company is highly integrated from brood stock management right through to distribution of product through its well-recognised consumer brands, Seasmoke, Regal and Southern Ocean.

Ross George, managing director of Direct Capital, highlighted the features that attracted the private equity firm, “Food production is clearly a New Zealand strength but difficult to gain exposure to for investors because ownership is so often tied up in the co-op model. We were especially attracted to New Zealand King Salmon because of its market-leading position, strong brands and the high demand salmon is experiencing as consumers switch to healthier and more sustainably farmed proteins.

“The company has a strong domestic base and export revenues represent 40 per cent so it’s well diversified. We think the level of integration in the business also offers a significant barrier to entry. And, when we looked at the typical consumer diet, salmon is a low percentage of protein content but growing strongly so it has tremendous potential.”

Owned by the family interests of the Tiong family in Malaysia, New Zealand King Salmon was formed in 1996 through the merger of Southern Ocean and Regal Salmon to provide industry scale and to develop a domestic market with a wide variety of value-add products such as fillets, smoked salmon and ‘ready to eat’ meals. This strategy has proven to be highly successful.

The Tiong representative in New Zealand, Mr Thomas Song expressed appreciation and support in welcoming Direct Capital to the company. “New Zealand King Salmon is one of the most favoured assets within our NZ portfolio. It has performed exceptionally over the last few years both in the New Zealand market and as an exporter facing challenging conditions”, said Mr Song.

“We will retain our majority ownership but the time was right to widen the company shareholder base and seek a partner that would provide valuable strategic input and additional governance oversight as the company expands its activities. Direct Capital will provide extensive experience in a range of business fundamentals and understanding of growth markets, and we are pleased with their determination to partner in the future of New Zealand King Salmon.”

The partnership aspect was also important for Direct Capital as Mark Hutton, who led the transaction for Direct Capital commented. “Our investment approach is very partnership driven and we back management in all of our businesses. We’re delighted that as part of this transaction the management team is also investing with us. They’re a very experienced team and it’s important to us that they also have a significant shareholding in the business.”

Paul Steere, New Zealand King Salmon’s chief executive, was also pleased with the introduction of Direct Capital. “The company has enjoyed significant growth over recent years underpinned by our value-add strategy and ensuring export pricing reflected the premium quality of our products. This has provided a strong platform for continued growth to meet increasing demand.

“While additional water space is a challenge, we are working through some innovative options with the regulatory authorities. Similarly we will need additional processing capabilities as a consequence of our growth and having Direct Capital as a shareholder and at the board table provides further support for these growth initiatives.”

ENDS

About Direct Capital

Direct Capital was established in 1994, by Ross George, Bill Kermode and Mark Hutton, who continue to own and manage Direct Capital. The team at Direct Capital today has 13 investment professionals. Direct Capital has raised over $440 million in seven funds. Recent investments include Rodd & Gunn, Go Bus, Shears & Mak4, Innovair, Paper Coaters, New Zealand Pharmaceuticals, and New Zealand Express Logistics.

www.directcapital.co.nz .

About The New Zealand King Salmon Company Limited

The New Zealand King Salmon Company Limited was formed in 1996 with the privatisation and merger of New Zealand’s two largest salmon companies, Southern Ocean Seafood Limited and Regal Salmon Limited. The Company is ultimately owned by the Tiong Group, one of the largest private companies in Malaysia with substantial global investments in forestry, property and the media. New Zealand King Salmon is New Zealand’s biggest integrated aquaculture company and the biggest global farmer of the premium Chinook species of salmon. Rich in Omega 3 and other nutrients, salmon is one of the fastest growing protein categories. The company employs 415 staff and operates six sea-farm sites in Marlborough Sounds, two hatcheries in Waikoropupu Springs and Tentburn; and four processing factories in Nelson

www.kingsalmon.co.nz

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