Singapore's BW LPG is hoping to bring in a new investor for its Indian VLGC joint venture as it expands the operation with more ships.
The Oslo-listed group said the BW LPG India subsidiary has bought four VLGCs from its parent, bringing the fleet to eight ships in what is a growing and increasingly important market.
The last vessel is expected to be delivered in the second quarter of 2022.
Headquartered in Chennai, BW LPG India is the largest owner and operator of India-flagged VLGCs.
BW LPG said it was in "advanced discussions" with an unnamed investor for the acquisition of a minority stake in the venture.
This will involve a cash payment of $50m, based on second-hand broker valuations of the fleet.
No further details were given, but the company said it will remain the majority shareholder.
The unit's four VLGCs controlled already are worth $207m, according to VesselsValue.
In May, BW LPG bought an extra chunk of the venture as it enjoyed stronger than expected earnings in the first quarter.
The Singapore parent now owns 88% of the venture, which was formed on a 50:50 basis in 2017 with Global United Shipping India, which is believed to retain a 12% holding.
The venture initially had two VLGCs that it purchased from BW LPG.
Two more disposals
The shipowner also said it was selling the 78,900-cbm VLGCs BW Sakura and BW Niigata (both built 2010) to a third party.
VesselsValue rates the pair as worth $53m and $54m respectively.
They will be delivered to their new owners for further trading in the first quarter.
The transactions are expected to generate $71.9m in liquidity and a net profit of $13.7m.
Five other disposals were carried out earlier this year, including two to the Indian unit.
With these sales, BW LPG owns and operates a fleet of 40 VLGCs.
Chief executive Anders Onarheim said the disposals are in line with its strategy of being a "returns-focused" company seeking to maximise value for investors.
The idea is also to position BW LPG to take advantage of opportunities for growth "from a global energy transition towards a zero-carbon future".
Shares to be acquired
The board has also decided to start a stock buyback programme that will see it acquire up to 10m shares for a maximum $50m. This will run until the second quarter of 2022.
Onarheim said: "Our corporate actions reflect our ability to react to market opportunities — we are selling assets at a profit to our book values, and investing in the company by buying shares which are trading at a significant discount to our shareholders' equity value."
Fearnley Securities said the company was continuing its "fleet high-grading" with the deals.
"With the share trading at circa 50% of net asset value, this is an exercise (selling assets and buying equity at a steep discount) that in our view makes a lot of sense," analysts Peder Nicolai Jarlsby, Erik Gabriel Hovi and Ulrik Mannhart added.
