Aggressive demand for aggressive chemicals
Tankers used to ship chemicals require a degree of customization. Smaller than normal tankers, they are divided into self-contained compartments so that cargoes can be loaded without any mixing. There may also be specialized heating systems to keep chemicals viscous in transit. And then the tanks themselves are sometimes made from stainless steel.
"The majority of chemical tanking vessels come with epoxy or marine lining and they can be used for carrying vegetable oils. Stainless steel vessels must be used for the transport of fine and acidic chemicals," says Greg Karpinski, managing director at Standard Chartered Private Equity (SCPE). "The number of stainless steel vessels in operation globally is still relatively small compared to the overall chemical tanker fleet and will need to rise to meet increasing demand for transportation services."
Demand to ship high-end chemicals - sulfuric acid, phosphoric acid, acetone and ethanol dichloride are among those that would require stainless steel tanks - and customers' willingness to pay a premium for the service is behind SCPE's recent investment in Greathorse Chemical.
The PE unit is contributing $65 million to the company for a 40% stake. SCPE's partner, Tiger Group Investments, is putting in $30 million while another $65 million will come from other financial investors.
Shanghai-based Greathorse Chemical currently has eight vessels with four more under construction. The investment will be used to fund the construction of new vessels as well as acquisitions through the resale market. The firm wants to grow the fleet to more than 20 and become a top 10 player in the chemical tanking space.
The eight vessels in operation comprise a fleet that Tiger Group has been operating for the past two years. The specialist maritime investor already has a string of customers, including Shell, BP, Samsung and Wilmar International, and relationships with leading shipyards.
It is also an investor in Greathorse Group, a shipper that operates separately to Greathorse Chemical, and the firm that manages the Greathorse fleet as well as those of select third-party clients. The latter company will provide technical and shipping management services to Greathorse Chemical as it scales up.
Part of SCPE's value-add is geographic coverage. The captive private equity unit operates in the same regions as its parent bank - Asia, Africa and the Middle East - and Greathorse Chemical sees these as target-rich areas.
"The investment thesis is built around the operating and commercial competency of the teams that are going to run the venture and the overall supply and demand characteristics for fine chemicals and vegetable oils," Karpinski adds. "This is tied in part to the massive increase in production of shale gas in the US and the expected increase in the production of various petrochemicals. A significant amount of additional production will need to be transported."
More on Expansion
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.