On 15 August 2024, BW LPG Limited (“BW LPG” or the “Company”), listed under the ticker codes “BWLPG.OL” on the Oslo Stock Exchange and “BWLP” on the New York Stock Exchange, announced a landmark acquisition of 12 modern Very Large Gas Carriers (VLGCs) from Avance Gas Holdings Ltd (“Avance Gas”, OSE ticker code: “AGAS”). This strategic acquisition marked a significant step in BW LPG’s mission to reinforce its position as a global leader in the liquefied petroleum gas (LPG) shipping industry.
The final vessel under this transaction, BW Avior, was delivered on 31 December 2024, successfully concluding the delivery of all 12 VLGCs. The entire handover process was executed seamlessly, highlighting the expertise and professionalism of both BW LPG and Avance Gas teams. With this, the transaction has been formally completed, marking a pivotal moment for the Company.
Share Issuance as Part of the Consideration
As part of the acquisition arrangement, BW LPG issued 2,141,000 new shares to Avance Gas on 31 December 2024. This issuance was integral to the final delivery of BW Avior. Following this transaction, the total number of BW LPG shares in issue has risen to 159,282,000, representing a share capital of USD 619,867,048. These newly issued shares have been legally validated and are fully paid, ensuring compliance with regulatory standards.
Post-issuance, Avance Gas holds a total of 19.282 million shares in BW LPG, which constitutes approximately 12.11% of the Company’s shareholding. It is worth noting that each tranche of consideration shares is subject to a 40-calendar-day lockup period from the date of delivery and issuance.
Financial Highlights of the Transaction
The total value of the acquisition was USD 1,050 million, structured as follows:
- Cash Consideration: USD 585.4 million.
- Novation of Sale-Leaseback Obligations: USD 132 million for two vessels.
- Share Issuance: 19.282 million BW LPG shares priced at USD 17.25 per share, amounting to USD 332.6 million.
This comprehensive transaction structure showcases BW LPG’s financial prudence and strategic foresight. As of the Q3 earnings release, the Company’s liquidity stood at USD 552 million post-transaction, with 14 vessels remaining unencumbered and available for financing in 2025.
Strategic Implications for BW LPG
With the acquisition now complete, BW LPG’s fleet has expanded to an impressive total of 53 VLGCs. Among these, 22 vessels are powered by LPG dual-fuel technology, aligning with the Company’s commitment to sustainability and operational efficiency. This expansion solidifies BW LPG’s standing as the world’s largest owner and operator of VLGCs, further strengthening its competitive edge in the industry.
The increased fleet size also enhances BW LPG’s commercial scale and operational leverage. The Company’s balanced chartering strategy remains central to its operations, with a target of maintaining 35-40% of its fleet capacity under time charters and Freight Forward Agreements. This approach ensures optimal utilization and revenue generation while mitigating exposure to market volatility.
Market Outlook and Operational Insights
The VLGC spot market is currently trading in the mid-USD 40,000s per day. While rate fluctuations are anticipated, the outlook for 2025 remains positive. The market is buoyed by robust growth in LPG production and exports from North America, driven by ongoing export terminal expansion projects. However, normalized Panama Canal transit levels over the past six months have reduced sailing distances, applying downward pressure on rates. Despite these challenges, the long-term fundamentals of the market remain strong.
BW LPG Completes Acquisition of 12 VLGCs with Final Vessel Delivery
The second half of 2025 is expected to witness a resurgence in market rates, supported by the continued growth in LPG exports and improved infrastructure. BW LPG is well-positioned to capitalize on these trends, leveraging its expanded fleet and strategic market positioning.
Leadership Perspectives
Kristian Sørensen, CEO of BW LPG, expressed his satisfaction with the successful completion of the transaction. He stated, “I am very pleased to announce the successful closing of the transaction and the commencement of revenue generation from our additional 12 VLGCs. I thank the Avance Gas team for ensuring an efficient and seamless handover process. We have issued 15% more shares to expand our owned fleet by 40% and through our enlarged fleet, we are enhancing our commercial scale and operational leverage.”
Conclusion
The acquisition of 12 modern VLGCs from Avance Gas marks a transformative milestone for BW LPG. The successful integration of these vessels into its fleet not only enhances the Company’s operational capabilities but also reinforces its market leadership. With a robust financial position, a balanced chartering strategy, and a positive market outlook, BW LPG is well-equipped to navigate the dynamic landscape of the global LPG shipping industry in 2025 and beyond. This strategic expansion underscores the Company’s commitment to delivering sustainable growth and value creation for its shareholders.