Hafnia Takes Control of CTI Chemical Fleet
Singapore’s Hafnia has agreed to buy all outstanding shares in Denmark’s Chemical Tankers Inc. (CTI) – formerly known as Navig8 Chemical Tankers – taking control of the latter’s fleet of 32 IMO II product/chemical tankers. Hafnia said once the transaction closes, expected by Feb. 1, 2022, it will be the world’s largest operator of product and chemical tankers, owning 133 vessels as well as managing more than 230 others.
Under the terms of the transaction, CTI shareholders will receive shares in Hafnia, representing 21.5% of the outstanding shares in the combined entity. CTI’s major shareholder, funds managed by Oaktree Capital Management, will hold 20.4% of the merged company.
"The addition of the CTI fleet will help enhance our resilience in the face of volatile markets and create a more sustainable and future-proof transportation business that will include the ability to transport methanol, in addition to many other cargoes." said Hafnia CEO Mikael Skov.
For CTI shareholders, the takeover provides access to greater economies of scale with the opportunity to improve returns, along with lowering cost of debt and upside exposure to the product tanker market.
Because CTI’s ships are a strong complement to its existing fleet, Hafnia said they will unlock many synergies, such as better vessel utilization and increased trading flexibility, among others. They will also unlock arbitrage opportunities by enabling a switch between chemical and product cargoes, should one of the segments outperform the other over a sustained period of time.
In addition, taking over CTI’s vessels will reduce the average age of Hafnia’s fleet to seven years, also increasing the proportion of Eco ships, which are designed to be fuel-efficient and generate lower emissions.
According to Hafnia, the outlook for the chemical tanker market remains highly attractive, due mainly to robust demand drivers and a favorable supply outlook. Hafnia said cargo volumes for chemical products have been steadily rising over the years and are expected to continue increasing in the years to come. In addition, with a low orderbook for chemical tankers, tonne-mile demand for moving chemical products is poised to increase further as demand for capacity exceeds growth in the fleet.
In contrast, growth for product tanker fleets looks to slow in the coming years, only achieving 1.8% in 2021 compared with 3.2% in 2020. Furthermore, product tanker orderbooks in November 2021 stand at only 6% of the existing fleet, one of the lowest-ever levels.
There is also significant consolidation and growth potential in both the product and chemical tanker markets, the Singapore-based shipowner said, noting that the top 20 tanker owners control less than 30% of the global fleet.
Author: Elaine Burridge, Freelance Journalist
