APICORP, Bahri to launch $1.5 billion shipping fund

RIYADH: The Arab Petroleum Investments Corporation (APICORP) and the National Shipping Company of Saudi Arabia (Bahri) announced the launch of a landmark shipping fund.

An agreement to establish the APICORP Bahri Oil Shipping Fund (ABOSF) between APICORP and Bahri was formally signed at a ceremony held in Riyadh on July 17, in the presence of Khalid Al-Falih, minister of energy, industry and mineral resources and chairman of Saudi Aramco.
The ceremony was attended by Aabed bin Abdulla Al-Saadoun, chairman of APICORP; Abdulrahman Mohammed Al-Mofadhi, chairman of Bahri; Raed Al-Rayes, deputy CEO and general manager of APICORP; Ibrahim Al-Omar, CEO of Bahri; and Naser Al-Abdulkareem, president of Bahri Oil Transportation. Other senior officials and advisers from both organizations were also present.
The fund’s target is to acquire approximately 15 very large crude carriers (VLCCs) over three phases with total investments of up to $1.5 billion composed of debt and equity.
APICORP will be the main investor and fund manager, while Bahri the exclusive commercial and technical manager.
APICORP will invest 85 percent in the fund with Bahri investing the remaining 15 percent. The fund will be a closed-end fund with a 10 years life period, and will deliver returns derived from the commercial employment of the VLCCs.
Al-Saadoun said: “We are delighted to be launching this fund in partnership with an esteemed organization like Bahri, a leader in the shipping industry. This fund will not only reduce the Kingdom’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 Vision 2030.”
This agreement is in line with Saudi Arabia’s long-term economic diversification plan, support economic growth and creating employment opportunities. The project is described as a step in the right direction to enhance maritime sector awareness and augment growth of this industry in the country.
APICORP and Bahri have developed a “unique structure” that assists Bahri in increasing its VLCC fleet. This will also make Bahri the biggest VLCCs operator in the international VLCC market segment.
Al-Rayes commented: “The launch of this fund is a further example of APICORP's unrivaled 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."