Saudi shipper Bahri targets acquisitions in Asia, Middle East

Saudi Arabia's Bahri, the world's largest owner of very large crude carriers, is seeking acquisitions in Asia and the Middle East. (Reuters)
Updated 07 November 2018
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Saudi shipper Bahri targets acquisitions in Asia, Middle East

  • Bahri is world's biggest owner of VLCCs
  • Targets listed firm in Asia

RIYADH: Saudi Arabia’s Bahri is targeting acquisitions in Asia and the Middle East as the exclusive oil shipper for state energy giant Saudi Aramco seeks to expand its reach, the chief executive said on Wednesday.
Bahri is the world’s largest owner and operator of very large crude carriers (VLCCs). Saudi sovereign wealth fund the Public Investment Fund (PIF) owns 22 percent of the company and Aramco has a 20 percent stake.
“We are looking at multiple acquisitions in the Middle East and Asia worth tens of millions of dollars,” Bahri CEO Abdullah Aldubaikhi told Reuters.
“We want to tap into a new area related to the maritime sector by acquiring companies offering services that are not currently available within Bahri’s portfolio,” he said, without specifying what services would be added.
The company aimed to buy a listed firm in Asia in a deal that would probably be completed in the third quarter of 2019, he said, without elaborating.
Bahri transports Saudi Aramco’s VLCC cargoes on a cost, insurance and freight (CIF) basis, making it the world’s busiest oil shipper.
It transports crude oil, chemicals and dry bulk. It also offers ship management services. In 2014 it merged with the former shipping arm of Aramco, Vela Marine International.
Acquisitions in the pipeline will be financed from the company’s own funds and banking finance, Aldubaikhi said.
The company, which has 45 VLCCs, plans to add 15 more to its fleet through a $1.5 billion investment fund it launched in 2017 with Arab Petroleum Investments Corp. (APICORP).
The APICORP Bahri Oil Shipping Fund (ABOSF) will raise $1.5 billion in three stages raising $500 million each time. APICORP will contribute 85 percent of the funds and Bahri the rest.
The first $500 million phase would be raised in the first quarter of 2019 and the second tranche would probably be completed in the second quarter of 2020, Aldubaikhi said.
Bahri reported a 34.4 percent increase in third quarter net profit to SR81.3 million ($22.7 million) after zakat and tax, versus SR60.5 million a year earlier.
“We are expanding and growing, and although the shipping industry is cyclical, I think it has bottomed out in 2018,” Aldubaikhi said. “The cycle of the shipping industry in 2019 will improve, and the years 2020 and 2021 will be the golden years for this industry.”


Japan, Philippines meet to advance infrastructure plans

Updated 49 min 33 sec ago
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Japan, Philippines meet to advance infrastructure plans

  • Japanese loans so far dwarf those of China, whose pledges for projects are still largely ideas
  • Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but people are looking for progress

MANILA: Philippine government ministers met with a top adviser of Japan’s prime minister on Wednesday, in a effort to move forward major infrastructure projects, just hours after a visit by the Chinese president pledging to do the same.
Philippine leader Rodrigo Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but already into the third year of his presidency, he is under some pressure to show signs that his ambitious “Build, Build, Build” program is making much progress.
While attention has been focused largely on fanfare of Duterte’s “pivot” to China and his frequent praise for Beijing’s economic support, agreed Japanese loans so far dwarf those of China, which has pledged billions of dollars of financing and investment for projects that are still largely ideas.
Japan will finance 156.4 billion yen ($1.39 billion) for the construction of a subway in the capital Manila, rehabilitation of one of its troubled elevated rail lines, a new Manila bypass road and a new airport on Bohol, a tourist island.
The loans are part of an 1 trillion yen aid and investment package offered in 2017 by Japanese Prime Minister Shinzo Abe, whose special adviser, Hiroto Izumi, is in Manila to discuss revamping a railroad across the capital, a flood control system, and jointly operating an industrial zone, Finance assistant secretary Antonio Lambino told Reuters.
Edmund Tayao, a Manila-based political analyst, said the strong performance of the Philippine economy meant it had outgrown its infrastructure, and there was public pressure to modernize it.
“This is a long-delayed requisite,” he said. “When we speak of trains, mass transit systems, disappointment is an understatement. It is frustrating to compare it with neighbors.”
Expectations have been high since Duterte left China two years ago with $24 billion of investment and loans pledges, and there were hopes that this week’s visit of Chinese President Xi Jinping, the first in 13 years, would have seen firm commitments for those to advance.
However, of Tuesday’s 29 agreements, the only loan agreed was $232.5 million financing for a dam. Others counted as deals included two feasibility studies, memorandums of understanding for arrangements that already existed, or a handing over of certificates.
Michael Ricafort, an economist at RCBC bank in Manila, said that with the spotlight on foreign interest in the infrastructure program, the government was keen to show progress was being made.
“The government is now put on the spot. People are looking for the promises to be fulfilled.”