UK’s investment company Tufton Oceanic Assets Limited has decided to expand its fleet with two vessels.
On 30 December 2021, the company said it will acquire a product tanker for $30.9 million and a Handysize bulker for $23.6 million.
The tanker is being acquired at approximately 85% of depreciated replacement cost (DRC). It has a fixed rate time charter of twelve to twenty-four months producing a net yield over 8% despite a relatively weak tanker market presently.
The investment manager believes that positive drivers for both demand recovery and very low supply growth will significantly increase charter rates and values in the medium term.
Furthermore, the Handysize bulker is being acquired below DRC. It has a fixed rate time charter of eighteen to twenty-four months producing a net yield over 15%.
Both vessels are already in the top quartile of fuel efficiency in their market segments but will be evaluated for further improvement, including the retrofit of energy saving devices (ESDs), the company disclosed.
The product tanker already incorporates some ESDs and other design features which have a similar or better impact on efficiency.
The latest acquisitions come only a few days after Tufton Oceanic agreed to divest Containership Swordfish for $19 million. The realised net IRR will be 27% and realised net MOIC will be 2.4x. Swordfish was acquired in January 2018 for $10.25m as one of the company’s first two investments together with the Containership Kale, which was sold earlier in 2021.
The acquisitions, together with announced divestments, are said to demonstrate Tufton Oceanic’s commitment to ESG and capital re-allocation. The latter is increasingly relevant given absolute and relative movements across and within the main shipping markets since 3Q20.
Tufton Oceanic Assets Limited invests in a diversified portfolio of secondhand commercial sea-going vessels with the objective of delivering strong cash flow and capital gains to investors.
Last year, the fund management company announced a corporate reorganisation in an effort to better position itself for growth opportunities.