Tufton Oceanic Assets will focus on fleet renewal through secondhand acquisitions in the near term, but is signalling a major shift in strategy towards the end of the decade.
The London-listed shipowning fund said that since its IPO in 2017, it has delivered strong results in line with its original objectives, despite a challenging economic and operational backdrop during Covid, geopolitical events and the impact of inflation.
Tufton has been carrying out a medium-term strategy review to 2030 with Tufton Investment Management, its investment manager, as a result of the share price discount to its net asset value.
The owner expects investment opportunities for fuel-efficient secondhand vessels to be strong for the next decade as shipping slowly transitions to zero-carbon fuels to meet tightening regulations and decarbonisation targets.
“The board and the investment manager believe that strong supply-side fundamentals will continue to support high yields and secondhand values, resulting in future internal rates of returns being higher than the company’s published target,” Tufton said.
The fund has decided to continue investing in fuel-efficient secondhand vessels to maximise shareholder returns.
The intention is then to “realise” the portfolio of tanker, bulker and LPG carrier assets starting from 2028, well before the decarbonisation of shipping accelerates.
The company has been contacted for clarification of what this means, but it could signal a fleet sale.
“The company sees fleet renewal (based on age, technology and sector outlook) as a priority,” Tufton said.
As of 31 December, the fund’s net asset value (NAV) was $427.1m.
The company is paying a dividend of $0.021 per share for the fourth quarter.
Dividends to rise
Tufton said the annual dividend target will now be increased by nearly 18% from the first quarter, from $0.085 per share to $0.10.
Directors are also considering a one-off payment to shareholders in the second quarter of between 5% and 10% of NAV.
“The board will annually evaluate a further return of capital using excess investible cash if no suitable investment opportunities are presented,” the company added.
Last week, Tufton cashed in two of its oldest tankers for a big profit.
The 2008-built, 37,300-dwt MR1s Dinah and Pluto have gone for a combined $41.75m to unnamed interests.
The Dinah was bought from Ridgebury Tankers in 2020 for $13.25m and the sister was acquired from Claus-Peter Offen in 2018 for $12.2m, giving a profit of around $16m on the deals.
Tufton said the price represents a 3.1% premium to the most recent holding NAV of $40.50m for the duo.
