Fredriksen’s Avance Gas sells $1 billion fleet to BW LPG

(Bloomberg) — Avance Gas holding Ltd., whose largest shareholder is Norwegian shipping billionaire John Fredriksen, said it has agreed to sell its entire fleet of very large gas carrying ships to BW LPG Ltd. 

The deal will see BW acquire the vessels for a total cost of just over $1 billion the companies said in a statement. Avance will become the second-largest shareholder in BW as a result of the deal, owning almost 13% of it. Its shares surged, while BW’s slipped. 

Very large gas carriers are the biggest vessels to haul liquefied petroleum gases such as propane and butane, but have a potential future use in hauling ammonia too.

Earnings in the sector have spiked in recent years after a surge in U.S. natural gas liquid exports and bumper Chinese buying was compounded by disruption in the Panama Canal. 

That boom has since cooled however as the orderbook of such ships mushroomed, in part as shipowners gamble that ammonia will be a widely-used marine fuel in the coming decades.

“The acquired vessels will further enhance our commercial scale and increase our operational leverage in a market we expect to be strong in the coming years and as such solidify earnings and dividend potential,” said Kristian Sorensen, Chief Executive Officer of BW LPG. 

Avance’s shares climbed as much as 11% in Oslo before paring gains. BW’s fell as much as 3.1%, before paring losses. 

The deal will add to BW’s fleet of VLGCs, which was already the largest in the world.