UK shipowner Tufton Oceanic Assets looks likely to sell its vessels by the end of the decade — but a new Tufton-backed venture could take its place.
The London-listed fund, overseen by Tufton Investment Management, revealed on Wednesday that it has been considering its near-term future as shipping moves towards decarbonisation.
The company said it would start to “realise” its portfolio of vessel assets from 2028 towards the end of the decade.
TradeWinds understands the intention is to start liquidating the portfolio of ships and not reinvest the money in more vessels.
But nothing is set in stone and this could change if markets do.
If the fund is wound up, a fresh vehicle could be set up looking at new-fuel vessels, so that investors can make the shift to low-carbon shipping.
The fund, listed through an IPO in 2017, was never intended as an evergreen operation.
The company does not invest in newbuildings and relies on secondhand opportunities.
Tufton Oceanic is subject to a continuation vote after its seventh year, ie in 2024, and then every three years after that.
Guidance for investors
The idea is to give a clear indication to shareholders now about a potential time frame for the realisation of their investments.
The company believes there will be significant opportunities to increase yields and returns over the coming four years.
In that period, the fund and Tufton Investment Management are emphasising fleet renewal through secondhand acquisitions.
Tufton Oceanic has 22 ships, although the sale of two tankers has been announced this month.
VesselsValue assesses the fleet as worth $526m.
This includes handysize and ultramax bulkers, as well as MR1, MR2 and chemical tankers, and an LPG carrier, all built from 2008 to 2016.
The midterm strategy review has been carried out as a result of the ongoing share price discount to its net asset value.
The owner anticipates investment opportunities for fuel-efficient secondhand vessels being very strong for the next decade as the shipping industry slowly transitions to zero-carbon fuels to meet tightening regulations and decarbonisation targets.
