Family Office

EXCLUSIVE: LNG – A Growth Driver For Three Groups Of Single Family Offices

Alasdair Graham 7 November 2022

EXCLUSIVE: LNG – A Growth Driver For Three Groups Of Single Family Offices

Demand for liquified natural gas, aka LNG, is high amidst a global energy crisis, magnified by Russia's attempted conquest of Ukraine and the aftershocks of the pandemic. We look at family offices that are tapping into LNG and related forms of logistics.

At this news service we like to track family offices’ investments, particularly when they touch on current controversies and trends. It turns out that the world’s energy crisis – magnified by Russia’s invasion of Ukraine – puts family-owned energy/logistics businesses very much in the limelight. 

We are delighted to carry the following analysis and data from Highworth Research, a database of single-family offices that offers unrivalled insights into what family offices are doing. For example, we ran an exclusive report in November 2020 about the German family office which was the principal investor behind BioNTech, the developer of the Covid-19 vaccine that is distributed by Pfizer. 

Drawing on publicly available information, the organisation drills down into the space. Highworth’s founder, Alastair Graham, offers the following insights. (This news service is exclusive media partner to Highworth Research. To gain access to its database and register, go to this link.)

Family office investors with exposure to the S&P 500, with a decline of 20.2 per cent over the past year, or the S&P 100 with a decline of 19.7 per cent over the same period will be feeling a little sore. In troubled times gold hasn’t proved a consolation: the price has declined by 10.3 per cent in the past 12 months, with silver faring even worse with a drop of 19.7 per cent. 

Growing inflation, rising interest rates, the war in Ukraine, the constricted gas supply in Europe, have all served to dampen economic prospects. However there is a sector that is dong remarkably well, in spite of or even because of these negative headwinds, and that is the transport of liquefied natural gas (LNG), where record charter rates prevail. Moreover, it’s clear that some of the beneficiaries of these soaring rates are family-owned companies which have been very astute and entrepreneurial in investing in LNG assets in recent years and now they and the family offices which often sit behind them, are reaping profits at record levels.

There are three different groups of family offices which will benefit from the LNG tanker rates spike. A resource such as the Highworth Family Offices Database with its detailed profiles of 2,000 single family offices globally can be used to identify those whose assets under management are being boosted by the inclusion of LNG assets in their portfolios.

Family offices controlling gas production assets
The first group are those which directly or indirectly hold private ownership of producing gas wells. The Highworth Family Offices Database shows that there are 39 single family offices in the US in this position. Many of them will be shipping gas to Europe and Asia. Whether their hydrocarbon assets are listed or private, they will be enjoying record net income gains over the past six months which the FT reported on 5 November to be “the sector’s most profitable six months on record.”

Sovereign family offices in gas-rich Gulf countries
The second group is the “sovereign” family offices belonging to members of the ruling families of the major gas exporters in the Gulf, particularly those with small populations and therefore high concentrations of UHNW individuals. These include Qatar, where there are five sovereign family offices profiled on the Highworth Database, or Oman, where there are three sovereign family offices, or Abu Dhabi, which also has three family offices owned by a member of the ruling family.

Family offices with LNG tanker assets
The third group are more difficult to identify as LNG beneficiaries. These are the family offices which directly or indirectly are substantial investors in LNG tankers. However, the search filters on the Highworth Family Offices Database can be used to identify these family offices.

There are 13 in total, four in the US, three in Norway, two each respectively in Singapore and the UK, and one each in Finland, Greece, and Monaco. They are the beneficiaries of an extraordinary boom in LNG tanker charter rates.

The boom in rates is driven both by heightened demand for gas from sources other than Russia and secondly by the scarcity of availability of LNG tankers. This has led to charter rates per day reaching record highs for transport of gas cargoes from the US gulf coast to NE Asia and to Northest Europe.  

LNG tanker charter rates rise 600 per cent in 16 months
-    July 2021: $80,000 per day; 
-    July 2022: $120,000 per day; and 
-    31 October 2022: $468,000 per day US Gulf coast to N W Europe and $478,000 per day from US Gulf coast to Northeast Asia.

These numbers may vary depending on the type of tanker and the route but the massive upward trend in a short period is clear.

Charter rates could reach $1 million per day 
Since Europe is still the beneficiary of a mild start to the winter months, it is likely that charter rates will not stop at present levels. “LNG deals at $1 million a day are possible” reported the respected Drewry Shipping Consultants in October 2022. 

“Elevated prices are here to stay into 2023” claimed Flex LNG, the owner of a LNG tanker fleet in which John Fredriksen’s family office has a substantial minority stake.

Family office beneficiaries from the surge in LNG tanker charter rates
The Highworth Family Offices Database identifies these 13:

•    Hoegh Capital Partners, the family office of the Norwegian Hoegh family in the UK. The family owns the shipping company Leif Hoegh & Co, a major player in LNG carriers, and LNG import terminals. Hoegh LNG is owned in a 50/50 joint venture between Leif Hoegh & Co and Morgan Stanley Infrastructure Funds, which in turn owns 46 per cent of Hoegh LNG Partners LP, listed in New York. Hoegh LNG’s stock price in September 2020 was $4.55; a year later on 15 September, 2021 it had risen to $9.23; by 4 November 2022 the stock price had climbed to $21.55 and a market cap of $511 million, a near-fivefold gain in 26 months.

•    Seatankers Management, the family office and master-investment company of Norwegian-born, Cypriot citizen resident in UK, John Fredriksen. Fredriksen has two LNG tanker assets, Flex LNG and Avance Gas Holdings. Both are listed. He controls 46.5 per cent of Flex, the share price of which has gained 62 per cent between 1 November 2021 and 4 November 2022, valuing his holding at $793 million. He also controls 59.7 per cent of Avance, the share price of which has grown 76 per cent over the past year, valuing his stake currently at $2.93 billion. 

•    WAK Family Office acts for Anders Wilhelmsen of Norway, and the Wilhelmsens have a second family office in Aweco AS. Through Awilco AS the family owns 38.6 per cent of Euronext listed Awilco LNG, which owns two LNG carriers. The stock price of Awilco has grown by 77 per cent over the past year to 4 November 2022.

•    Aii Corporation of Finland, the family office of Pekka Viljakainen, an investor in LNGtainer.
•    Anholt Services of the US, the family office of the late Axel Karlshoej; in 2004 his legacy master company Teekay Shipping moved into the LNG transportation market by acquiring the Spanish Naviera F Tapias for $1 billion.

•    AT Capital of Singapore, the family office of Arvind Tika; the family office holds a minority stake in a Kazakh rail company moving LNG from Kazakhstan to China.

•    Blue Spruce Capital of the USA, which holds 63 per cent of Freeport LNG, the export capacity of which amounts to about 33 per cent of US LNG export capacity;  

•    Ceres Monaco, the family office of Peter Livanos, who controls 41 per cent of Gaslog Ltd, owner of 34 LNG carriers; 

•    Entrepreneurial Spirit Holding, the family office of George Economou, the owner of TMS Cardiff Gas, which runs a fleet of five LNG carriers; 

•    Golden Alpha Pte Ltd of Singapore, a private investment company controlled by the Sohmen family which owns BW LNG, the operator of a fleet of 34 LNG carriers and FSRUs (Floating Storage Regasification Unit); 

•    Hunt Investment Group of the US, the family office of Ray Hunt, which is developing LNG operations in the Yemen and Peru; and 

•    Umoe Gruppen of Norway, the family office of Jens Ulltveit-Moe, who owns a fleet of six LNG tankers.

Is it likely that the family offices which are the beneficiaries of heightened gas prices and the LNG tanker boom will recycle profits into the capital markets to diversify risk? From the thirteen single family offices surveyed here, there will be thirteen different answers.

Register for WealthBriefingAsia today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes