(Bloomberg) — South Korean shipping firms SK Shipping Co. and H-Line Shipping Co., both owned by private equity firm Hahn & Co., are set to trade tankers and contracts. This move aims to form one of the largest liquefied natural gas (LNG) carrier operators in the world.
As part of the agreement, SK Shipping will acquire 16 LNG vessels along with their long-term contracts from H-Line. In return, SK will give H-Line 12 tankers, their respective contracts, and around $300 million in cash, according to a statement from the buyout firm on Thursday.
With this deal, SK Shipping will become the third-largest operator of LNG carriers globally, while H-Line will strengthen its position as a major player in the tanker and bulk-shipping sector in the region.
This tanker swap is part of a long-term strategy to transform the Korean shipping industry. It also comes at a time when recent tensions in the Persian Gulf are affecting energy trade, creating profitable opportunities for shipowners, charterers, and traders.
Having a larger, consolidated fleet supported by long-term contracts can lead to more stable cash flows in an industry often affected by volatile freight rates. According to Hahn & Co., the swap will help H-Line achieve “greater scale, operating efficiencies, and capital” amid geopolitical uncertainties.
Hahn & Co. founded H-Line in 2014 by taking over the long-term dry-bulk operations of Hanjin Shipping Co. The company expanded further by acquiring Hyundai Merchant Marine Co.’s long-term dry-bulk business in 2016.
In 2018, Hahn & Co. purchased around 80% of SK Shipping from SK Group and redirected the firm from risky spot-market activities toward vessels secured with long-term contracts.