APICORP and Bahri launch US$1.5bn shipping fund

bahriAPICORP will be the main investor and fund manager and Bahri will be the exclusive commercial and technical manager. (Image source: Bahri)The Arab Petroleum Investments Corporation (APICORP) and The National Shipping Company of Saudi Arabia (Bahri) have announced the launch of a landmark shipping fund to acquire very large crude carriers (VLCCs)

An agreement to establish the APICORP Bahri Oil Shipping Fund (ABOSF) between both companies was formally signed at a ceremony in Riyadh, in the presence of Khalid Al-Falih, Saudi Arabia’s minister of energy, industry and mineral resources, and chairman of Saudi Aramco.

The fund’s target is to acquire approximately 15 VLCCs over three phases with total investments of up to US$1.5bn composed of debt and equity. APICORP will be the main investor and fund manager and Bahri will be the exclusive commercial and technical manager.

According to company sources, APICORP will invest 85 per cent in ABOSF with Bahri investing the remaining 15 per cent. It will be a closed-end fund with a 10-year life period, and will deliver returns derived from the commercial employment of the VLCCs.

Chairman of Bahri Abdulrahman Mohammed Al Mofadhi said, “This fund will not only reduce Saudi Arabia’s dependence on external crude carriers but also its earnings will be reinvested in the local economy. As with any other initiative, our growth strategy for this investment, firmly falls in line with Saudi Arabia’s plans for future development as laid out in the Kingdom’s Vision 2030.”

The agreement was in line with Saudi Arabia’s long-term economic diversification plan, support economic growth and creating employment opportunities. According to both companies, the project was a step in the right direction to enhance maritime sector awareness and augment growth of this industry in the country.

Raed Al Rayes, deputy CEO & general manager of APICORP, noted, “The launch of this fund is a further example of APICORP’s unrivalled ability to provide innovative financing solutions that meet the demands of the energy sector. A mechanism such as this not only helps the energy industry to meet the logistical challenges presented by the current dynamics, but also has the potential to deliver attractive returns.”

According to Ibrahim Al Omar, CEO of Bahri, with a current fleet of 36 VLCCs and 10 new build orders scheduled for delivery in 2017-18, the 15 crude carriers proposed for acquisition under this fund will propel Bahri into becoming the largest operator of VLCCs in the world.

Al Rayes added, “This fund is APICORP’s second shipping fund. The first shipping fund, APICORP Petroleum Shipping Fund (APSF), was launched as a five year closed-end fund in February 2013 and till today yields attractive returns by leveraging growth opportunities in the petroleum products tanker charter market. ABOSF will capture a unique opportunity thrown open by the recent changes in the maritime oil logistics market of the region.”

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