French group Solabia buys kibbutz-based algae-maker Algatech

Solabia Group, a French maker of natural ingredients for the cosmetic, pharmaceutical and microbiology industries, has acquired Israel’s Algatech, a cultivator of microalgae based at Kibbutz Ketura in southern Israel.

No financial details were disclosed, though the Calcalist financial website estimated the deal at some $100 million.

Founded in 1998, and located in the Arava desert, Algatech is spearheading research in the microalgae industries, and is one of the few firms in the world that have managed to reach commercial-scale production at high standards, Solabia said in a statement on Wednesday.

Microalgae are microscopic algae found in freshwater and sea. They are one of the earliest forms of life and have survived for a billion years, as they are adept at adapting to particularly harsh environments. Together with bacteria, they form the base of the food chain.

Containing almost all the basic nutritional elements of life, microalgae are recognized as one of the most promising long-term, sustainable sources for food, health, chemicals and other products.

They are used today as components for cosmetics and food supplements, but they also have the potential to address the growing population’s need for a more sustainable food supply, and more specifically the higher demand for vegan sources of protein and high value lipids, the statement said.

There are nearly a million species of algae that have the potential to be valuable sources of ingredients, including proteins, omegas, vitamins, carotenoids and polysaccharides, but only a handful are currently commercialized.

The Algatech team has developed techniques to cultivate algae in greenhouse-like glass tubes, a process operated entirely on renewable energy. The desert’s harsh and stable climate, its high, year-round light intensity, and clean, unpolluted air are critical to successful and sustainable algae production, Algatech said. The process is designed to mimic nature’s processes using solar energy and recycled wastewater, with the only waste produced being oxygen.

Algatech exports its products to more than 35 countries worldwide that operate in nutrition, cosmetics, and the food and beverage industries.

The acquisition by Solabia will help Algatech boost growth, even as the company has had a double-digit revenue growth over the last several years.

“The strategic investment from Solabia will support Algatech’s continued focus on R&D and product development, as well as the expansion of its production capabilities, enabling the company to serve the increasing global demand for microalgae,” the statement said.

Algatech will become the focus of Solabia’s nutrition division, the statement said,

UK-based investment firm Grovepoint Capital and JCA Charitable Foundation, which were investors in Algatech, will be selling their stakes, while Kibbutz Ketura will retain a minority share in the company after the deal, the statement said.

Grovepoint acquired control of the Israeli firm in 2013, at a valuation of $50 million, Calcalist said.