BW LPG Completes Acquisition of 12 VLGCs from Avance Gas, Strengthening Global M

[Administrator]

On 31 December 2024, BW LPG Limited announced the successful completion of its landmark acquisition of 12 modern Very Large Gas Carriers (VLGCs) from Avance Gas Holdings Ltd. This milestone follows the company's earlier announcement on 15 August 2024 and marks a significant expansion of BW LPG's fleet and global operational capacity. The final vessel, BW Avior, was delivered on schedule, completing a smooth and seamless handover process for all 12 vessels.

As part of the transaction, BW LPG issued 2,141,000 new shares to Avance Gas as partial consideration for the final vessel delivery. Following this issuance, the company's total number of shares increased to 159,282,000, with a total share capital of USD 619.9 million. The newly issued shares are fully paid and legally valid. Avance Gas now holds approximately 19.282 million shares in BW LPG, representing a 12.11% ownership stake, further aligning both companies' strategic interests. Each tranche of shares issued is subject to a 40-day lock-up period after vessel delivery, ensuring market stability.

The total transaction value stands at USD 1.05 billion, making it one of the most significant deals in the LPG shipping sector in recent years. The acquisition was structured through a combination of USD 585.4 million in cash, USD 132 million in sale-leaseback obligations, and USD 332.6 million in equity through the issuance of new shares priced at USD 17.25 each. Upon completion, BW LPG reported strong liquidity of approximately USD 552 million, as highlighted in its Q3 earnings, positioning the company well for future financing opportunities. Notably, 14 vessels within its fleet remain unencumbered and available for financing in 2025, providing additional financial flexibility.

With the addition of these 12 VLGCs, BW LPG now owns and operates a total of 53 vessels, including 22 LPG dual-fuel ships. This expansion firmly establishes BW LPG as the world's largest owner and operator of VLGCs, as well as a leader in dual-fuel LPG vessel technology. The increased fleet size enhances the company's economies of scale, operational efficiency, and global reach in the liquefied petroleum gas shipping market.

BW LPG will continue to implement its balanced chartering strategy, targeting approximately 35–40% fleet coverage through time charters and Freight Forward Agreements (FFAs). This approach allows the company to manage market volatility while capturing upside potential in the spot market. As of late 2024, VLGC spot rates are trading in the mid-USD 40,000s per day, reflecting a dynamic but resilient market environment.

Looking ahead to 2025, BW LPG maintains a positive outlook for the LPG shipping market despite expected rate fluctuations. Recent normalization of Panama Canal transit levels has reduced voyage distances, temporarily putting pressure on freight rates. However, strong underlying fundamentals continue to support the market, particularly the sustained growth in LPG production and exports from North America. Expansion of export terminal infrastructure is expected to further drive demand for VLGC capacity in the second half of the year.

Commenting on the successful completion of the transaction, CEO Kristian Sørensen emphasized the strategic importance of the acquisition. He highlighted that the company has increased its share base by approximately 15% while expanding its owned fleet by 40%, significantly enhancing BW LPG's commercial scale and operational leverage. He also acknowledged the role of Avance Gas in ensuring a smooth and efficient vessel handover process.

This acquisition underscores BW LPG's commitment to growth, efficiency, and market leadership in the global LPG shipping industry. By expanding its fleet and strengthening its financial and operational position, the company is well-positioned to capitalize on future opportunities in a rapidly evolving energy and shipping landscape.