Large Chinese companies in animal feed and commodities are some of the few players likely to be willing to pay as much as $1.7 billion for the Peruvian assets of Pacific Andes International Holdings, sources told  Undercurrent News.

This  price tag, which was revealed by Pacific Andes as it attempts to end the provisional liquidation of China Fishery Group (for all our news on this ongoing story, click here) put in motion by lender HSBC, is considered to be very high by industry sources and analysts covering the sector, given the tough situation in the Peruvian industry.

&ldquo They are dreaming at $1.7bn,&rdquo one industry source, not wishing to be quoted by name, told  Undercurrent.

In 2013, Pacific Andes&rsquo China Fishery operation took over Copeinca for just under $800 million, fighting off Norway&rsquo s Cermaq. Since, catches in Peru have dived and the total allowable catch has been slashed, due to the impact of El Nino.

&ldquo Maybe they will get what they paid [for Copeinca],&rdquo source A said.

" If the valuations are correct, it must be a company of significant substance, $1.7bn   is a lot of money. The number of potential bidders is small,and very few are able to cash such a large check," said another top seafood sector CEO, also not wishing to be quoted by name.

Pacific Andes has stated the supposed $1.7bn valuation, but did not reveal any more details of the two would-be bidders. Cash rich and expansionist companies in China, however, may be willing to go this high.

&ldquo In China, you have a few options,&rdquo said one senior executive with a large aquaculture feed company, who did not wish to be quoted by name (source B).

There is limited interest for large companies involved in aqua feed only, such as Nutreco-owned Skretting or BioMar, due to the reduced levels of fishmeal going into aqua feed, said source B.

&ldquo If the price goes up, we can drop using fishmeal in salmon feed, or using very much less,&rdquo said the executive.

Much lower levels of fishmeal, down to 10%, can be used in salmon feed, he said. &ldquo We can go less than that in the future. So, for us, it [fishmeal] is no longer a strategic raw material."

Therefore, securing a source is not as critical as it used to be, he said.

" For very large animal feed companies, it remains a serious issue, also, because these big companies are trading fishmeal to others as a commodity," said source B.

Although there is more logic for Ewos owner Cargill, which is more active in other animal feed sectors, sources feel the focus for the US company is on integrating its most recent acquisition in salmon feed.

On the other hand, big Chinese feed firms, such as New Hope Liuhe or Tongwei Group, are looking to expand in aqua feed and also have large needs for fishmeal for poultry and livestock feed.

&ldquo A lot of fishmeal is not going into aquaculture, it is going into other types of feed, like piglet feed,&rdquo said source B.

&ldquo New Hope or Tongwei could be interested, as well as DBN Group [Beijing Dabei Nong Technology Group],&rdquo he said.

A note from Amino Acids China E-News on the Chinese feed sector states DBN Group established an aquatic business department at the start of last year and is looking to expand fast.

&ldquo At present, the firm has seven aquatic feed plants across the country, and will look to increase this number in 2015 by constructing new plants, merging with other companies and acquiring existing plants,&rdquo the note states.

In total, DBN Group will invest around RMB 2bn in the aquatic market, aiming to achieve a sales volume of 400,000 metric tons, CCM&rsquo s analysis states. &ldquo Beyond that, the company will look to open at least two new aquatic feed processing plants every year.&rdquo

Tongwei has also been expanding, inking a deal for a 100,000t feed factory in China in partnership with BioMar last year. It already  operates across China and in Southeast Asia, with over 100 branches and subsidiaries.

The company produced some 4m tons of feed in 2014, of which 2.5m tons were for the aquaculture sector.  According to BioMar' s press release on the joint venture, this makes Tongwei the world&rsquo s  largest aquafeed manufacturer, as well as a major livestock and poultry feed producer.

According to Amino Acids China E-News, New Hope also has big expansion plans. According to the note, the company' s &ldquo first aim [is] to expand within Asia, and if this is successful, it will aggressively expand on a global scale&rdquo .

New Hope has split the department dealing with overseas business in two, making one half responsible for business development in Asia, and the other half responsible for business development in countries outside Asia, according to the note. New Hope has already established 47 subsidiaries in Southeast Asia since it first entered the market in 1998.

China National Cereals, Oils and Foodstuffs Corporation (Cofco), a state owned commodities trading giant, as well as one of China&rsquo s largest food processors, could also be interested, sources told  Undercurrent.

&ldquo Tongwei, New Hope and DBN have a lot of cash and want to go into aquaculture,&rdquo said source B.

&ldquo But, from a commodities point of view, you have to mention Cofco. They want to secure commodities,&rdquo he said. &ldquo They are buying farmland and grain trading, so why not fishmeal? If China believes that fishmeal is a strategic ingredient for them, they could very well get hold on that.&rdquo

On Jan. 4, Cofco closed the deal for the 49% it didn&rsquo t already own of agricultural trading firm Noble Agri from Noble Group for $750m.

&ldquo The acquisition will greatly accelerate COFCO&rsquo s internationalization and global positioning,&rdquo said Frank Gaoning Ning, chairman of Cofco, making the group&rsquo s ambitions of expansion clear.