Private equity giant Kohlberg Kravis Roberts (KKR) has pledged to expand Norwegian shipowner Ocean Yield after it agreed a NOK 7.2bn ($829.5m) takeover.
A KKR unit called Octopus Bidco has reached a deal with major Ocean Yield shareholder Kjell Inge Rokke to launch a cash offer at NOK 41 per share, 26% more than the NOK 32.54 closing price on Friday.
News of the deal sent the stock soaring to NOK 41.04 on Monday morning in Oslo, up more than 26%.
The private equity group will get its hands on 63 vessels worth $2.1bn owned by the sale-and-leaseback specialist, whose independent directors have accepted the offer following a "strategic process", Oslo-listed Ocean Yield said.
A source familiar with KKR told TradeWinds that the group became involved as a result of a strategic review by Aker of its ownership interest in Ocean Yield.
The source added the group has "significant experience and deep roots in infrastructure investing".
Rokke's Aker, the largest shareholder through subsidiary Aker Capital, owns 61.65% of Ocean Yield.
Vincent Policard, partner and co-head of European infrastructure at US giant KKR, said the group had been impressed by what Ocean Yield’s management team and employees have achieved since the company was formed a decade ago, through the strategy of investments in modern fuel-efficient vessels on long-term charters.
KKR to help with funding
"KKR is excited at the idea of becoming a strategic partner to Ocean Yield’s management team to continue building a leading ship-leasing company to the benefit of all stakeholders, including by providing improved access to long-term capital to meet the substantial investment needs of the sector," he said.
Oyvind Eriksen, president and chief executive of Aker, said the Rokke company has been a driving force behind the development of Ocean Yield since it established the company in 2012.
He added that Ocean Yield has grown the fleet from three ships and is now positioned as a leading maritime leasing company, with a strong backlog towards solid counterparties and a highly competent management team.
"As an industrial investment company, Aker is constantly reviewing strategic options related to its investments and has now decided that it is time to let a new owner continue the growth journey," he said.
"We are happy to see that a renowned investment firm such as KKR recognises the strength of Ocean Yield and will support the further growth of the company as the new owner," Eriksen said.
The offer will begin by 4 October and be open for 21 days. If KKR reaches 90% acceptance, it will launch a compulsory offer for the rest of the stock and could delist the company.
Fair price
Andreas Nygard, an analyst at investment bank Kepler Cheuvreux, said the offer price was "fairly" in line with his target price of NOK 42 and implies significant growth prospects for the coming years.
He values the current fleet at NOK 35 per share and growth opportunities at NOK 7 per share.
Nygard said: "Given the uncertainty regarding growth, we find the offer price of NOK 41 ... a fair offer for the shares.
"Given the acceptance from main shareholder, the board, management and our estimation of a fair value including growth opportunities, we expect KKR to gain acceptance from the remaining 26% of shareholders needed to reach the 90% acceptance threshold."
Ocean Yield team 'excited'
Lars Solbakken, chief executive of Ocean Yield, said: "By leveraging KKR’s capital, expertise and network, Ocean Yield will be well positioned to develop the business with the intention to build a substantially larger company. The team is excited for the next phase of developing Ocean Yield."
Ocean Yield's directors and bosses own 2% of the stock and are all selling.
KKR said that given the long-term capital requirements of the shipping sector, including money needed for decarbonisation, a private setting will best suit Ocean Yield.
"KKR brings significant experience in leasing business models and transportation, in addition to providing long-term capital through its infrastructure strategies and taking a collaborative approach to value creation," the two companies said.
Ocean Yield has a fleet including tankers, bulkers and containerships, with charterparties such as Navig8, Scorpio Tankers and Okeanis Eco Tankers, as well as a small stake in offshore vessel owner Solstad Offshore.
KKR already has many shipping investments, including Chembulk Tankers and Borealis Finance, which it controls, and a 37% stake in ship repairer Hyundai Global Service, plus holdings in finance provider Australis Maritime and Embarcadero Maritime, which invests in distressed shipping assets.
The private equity company also revealed a 5% stake in tanker giant Euronav last year and backs Pillarstone, the owner of Italian tanker company Premuda.
