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Maine seafood company set for ‘exponential’ growth as Silicon Valley investor buys in

Posted Jan. 31, 2014, at 6:32 a.m.
A tray of whole, unbroken scallops wait to be packed into a can outfitted with a time and temperature indicator at Bristol Seafood on Portland's waterfront on Wednesday. The company recently got a cash infusion from a Silicon Valley investor.
A tray of whole, unbroken scallops wait to be packed into a can outfitted with a time and temperature indicator at Bristol Seafood on Portland's waterfront on Wednesday. The company recently got a cash infusion from a Silicon Valley investor. Buy Photo
Adam Callen packs scallops into cans outfitted with a date and temperature indicators at Bristol Seafood on Portland's waterfront on Wednesday. The company recently got a cash infusion from a Silicon Valley investor.
Adam Callen packs scallops into cans outfitted with a date and temperature indicators at Bristol Seafood on Portland's waterfront on Wednesday. The company recently got a cash infusion from a Silicon Valley investor. Buy Photo
Benson Otti puts labels on a &quotchef pack" can that will be filled with scallops at Bristol Seafood on Portland's waterfront on Wednesday.
Benson Otti puts labels on a "chef pack" can that will be filled with scallops at Bristol Seafood on Portland's waterfront on Wednesday. Buy Photo
Portland's Bristol Seafood recently unveiled its new &quotchef pack" cans of premium, unbroken scallops for use in restaurants. Each can holds eight pounds of scallops and is fitted with a date and temperature indicator.
Portland's Bristol Seafood recently unveiled its new "chef pack" cans of premium, unbroken scallops for use in restaurants. Each can holds eight pounds of scallops and is fitted with a date and temperature indicator. Buy Photo
Darrell S. Pardy, and his business partner, Ray Swenton, have grown Bristol Seafood into one of the largest seafood processors in Maine and are now partnering with a Silicon Valley investor.
Darrell S. Pardy, and his business partner, Ray Swenton, have grown Bristol Seafood into one of the largest seafood processors in Maine and are now partnering with a Silicon Valley investor. Buy Photo
David Roux, a Maine native and co-founder of the Silicon Valley-based investment firm Silver Lake Partners, has invested in Portland's Bristol Seafood.
Courtesy of Bristol Seafood
David Roux, a Maine native and co-founder of the Silicon Valley-based investment firm Silver Lake Partners, has invested in Portland's Bristol Seafood.

PORTLAND, Maine — Darrell Pardy isn’t afraid to think big.

He and his business partner, Ray Swenton, have already grown their company, Bristol Seafood Inc., into one of the largest seafood processors in Maine. From its facility on Portland’s waterfront, the company employs 75 people and does $40 million a year in business.

But Pardy, Bristol’s CEO, thinks they could at least double that, if not more, in the next several years and become an international player in the seafood market. It’s doable, Pardy says, but requires additional capital, as well as some top-shelf business expertise.

In early January, Pardy and Swenton signed a deal with a new equity investor from Silicon Valley who brings both to the company.

Some would say the investment comes from an odd place considering Bristol’s business is scallops and haddock rather than software and hard drives. But look a bit deeper and the investment makes sense for both parties.

Bristol Seafood’s newest co-owner is David Roux, the well-known technology investor and co-founder of Silver Lake Partners, a Silicon Valley-based private equity firm that controls $25 billion in assets.

“It’s a huge thing for our company to have someone of his caliber on board,” Pardy told the Bangor Daily News in a recent interview.

Roux, whose investment in Bristol is a personal one, didn’t just happen upon a potential investment in Maine. He sought it out. Roux is a Maine native who grew up in Lewiston, graduating from Lewiston High School in 1974. He left Maine to attend Harvard University, followed with a graduate degree in economics from Cambridge University. Today, he owns a summer home in Harpswell.

Roux, 57, has founded several software companies, selling the first to Lotus and the second to Symantec. He then worked for Larry Ellison at Oracle until 1999, when he and a business partner founded Silver Lake Partners to invest in the high-tech sector. Over the years, Silver Lake has owned or had a significant stake in such well-known technology companies as Skype, Groupon and GoDaddy.com. It recently partnered with Michael Dell to buy Dell Computer for $25 billion.

“If a year ago someone were to tell me that David Roux would be a major investor in Bristol Seafood, I would have told them they were nuts,” Pardy said.

Roux’s investment — the details of which are not being disclosed, though Pardy said it’s “significant” — will allow the company to expand into a second facility and increase its production capacity.

Bristol’s ‘big goals’

Pardy and Swenton, Bristol’s chairman, founded Bristol Seafood in 1992 after they bought the business’ assets from their former employer, the Swedish company Abba, which was divesting of its North American holdings. Abba originally built the seafood processing facility on Portland’s waterfront in 1986.

That first year the company did $11 million in sales. Last year, it did roughly $40 million.

Roughly 80 percent of its business is scallops and haddock. While the scallops are sourced from all over the world, from local fishermen to scallop farms in Peru, the haddock all arrives frozen from Scandinavia — hook-and-line caught, not trawler-caught, Pardy pointed out.

When the haddock arrives — aboard Eimskip’s ships — Bristol thaws it, filets it and sends it to customers around the country. If a consumer sees previously frozen-at-sea haddock filets at Hannaford, there’s a good chance they came from Bristol, Pardy said.

The last couple years, Bristol has invested heavily in new processing equipment and in its ability to improve the traceability and sustainability of the seafood it processes, including the hiring of three food scientists. Working toward those goals has been very expensive, said Pardy, 55.

“We’ve been very successful,” he said. “We’re a profitable company, but we really needed additional capital and additional board expertise for us to achieve our big goals.”

So Pardy and Swenton quietly began looking for investors. They entertained potential partners from Europe and Asia and had several preliminary meetings, but nothing stuck. They weren’t looking for just any partner; they wanted someone who shared their philosophy around sustainability and appreciated that the business was in Maine.

“We didn’t want a partner that didn’t understand what’s going on in Maine and was only interested in a return on their investment the first year,” said Pardy.

Pardy met Roux in May after being introduced by a mutual contact at KeyBank. Pardy immediately felt an affinity with Roux on issues of sustainable practices, ethics and a desire to increase employment in Maine. Seven months after that first meeting, the deal was done.

“For us, he’s the perfect business partner to have,” Pardy said. “And hopefully for David, we’re the right business to invest in.”

Bristol’s board meets for the first time next week. Roux is the only investor, but they have nominated several other people to join the board, Pardy said.

While Pardy knows in general terms that he wants the business to grow, it will be in consultation with the board that a formal strategic plan will be created. The only thing he’s sure of is that “exponential” growth is the main goal.

“David didn’t invest in us to be flat, and we didn’t look for an investor to be flat,” Pardy said.

When asked what he’ll bring to the table, Roux said he knows quite a bit about growing businesses.

“They have a lot of opportunities in front of them, so I think I can help them choose between the best opportunities,” he said. “I know how to grow a business, how to finance a business, how to form partnerships and how to expand internationally.”

Maine ‘underappreciated’ among investors

Roux told the BDN on Wednesday that he handled this deal like any other, with months of due diligence and market research. In fact, he probably scrutinized this deal more than others because he had no previous familiarity with the seafood business.

“I’m not a fish guy,” Roux said by phone from Hawaii. “Fortunately, Darrell is a fish guy.”

Roux said he began looking for potential investments in Maine because he’s spending more time in the state and saw untapped opportunity.

“I think that Maine is underappreciated as an investment opportunity and historically I’ve done very well investing where other people are afraid to tread or wary or uninformed,” he said.

He looked at roughly two dozen businesses over the course of the past two years, he said, before choosing Bristol because he liked what Pardy and Swenton had done and saw real growth opportunities.

“I really like the way they run the business and I think there’s a very strong secular growth trend in the sector where they compete,” Roux said. “In other words, people want to eat more high-quality, sustainably caught fish.”

Roux said the investment had nothing to do with him having a soft spot for his native Maine.

“You make good investments when you’re prudent, thoughtful and unemotional about doing serious diligence to look for good people with robust businesses and real opportunities in front of them,” Roux said. “I think there’s more growth here than people think. You don’t make money investing in shrinking things. You make money investing in things that are growing, or things with the potential to grow.”

The news of Roux’s investment in a Maine business is a big deal, according to Jess Knox, a business consultant and one of the founders of Startup Portland, an organization formed to encourage development of greater Portland’s entrepreneurial community.

“He’s an opinion leader,” Knox told the BDN. “His opinion matters to hundreds of sophisticated investment organizations. If they didn’t, he wouldn’t be principal of Silver Lake Partners.”

The growth of Maine’s entrepreneurial community depends on investors getting involved, and attracting that investment means demonstrating that it is possible to build high-value operations here, Knox said.

“I’m hopeful that this will cause others who either have a connection to Maine or have thought about investing in Maine to take a second look because this guy took the plunge,” Knox said.

Though Roux is dipping his toes into the waters of Maine’s business community with his investment in Bristol, he said he’s not looking for additional investments at this time.

“Right now I have my plate full,” he said. “I’m always open to new and great ideas, but right now I’m looking to grow the one I got.”

 

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