Norwegian shipping company Avance Gas under John Fredriksen has agreed to sell its entire fleet of very large gas carriers (VLGCs) to Andreas Sohmen-Pao’s liquefied petroleum gas (LPG) company, BW LPG, in a deal valued at US$1.05 billion.
Under the deal, BW LPG, a dual-listed subsidiary of BW Group, will take over 12 vessels to be built between 2015 and 2023, expanding its VLGC fleet size to 41 vessels. The transaction and delivery of the VLGCs, which is expected to be completed by the end of this year, consists of a 12.77% stake in BW LPG valued at approximately US$333 million and US$585.4 million in cash, as well as a US$132 million debt novation related to the two sale-and-leaseback vessels.
Avance Gas, led by Øystein Kalleklev, is said to expect a profit of between US$310 million and US$320 million from the sale. Earlier this year, Avance Gas also sold a total of four VLGCs to other buyers, which in total will now bring in about US$435 million in 2024. Upon completion of the transaction, Avance Gas will become the second largest investor in BW LPG and own four medium-sized gas carriers.
BW LPG stated that this fleet expansion comes at an opportune time as VLGC newbuilding deliveries are declining and global LPG exports continue to grow. By the end of this year, the global VLGC fleet will reach approximately 400 units, with an additional 13 newbuildings scheduled for delivery in 2025.
“The fleet of Avance Gas is today a bit sub-scale, and we have therefore found it more attractive for our shareholders to take advantage of the relatively high secondhand prices and sell the VLGC fleet to BW LPG,” said CEO Kalleklev, adding: “We find BW LPG well positioned with an integrated business model priced at a relatively modest price and this transaction will further strengthen BW LPG with both cost and income synergies. In our pragmatic view, it doesn’t matter whether the ships are black or light green as long as they are generating cash.”