3i Infrastructure plc has signed an agreement with Oiltanking GmbH to acquire a 45% interest in Oiltanking Terneuzen B.V. in the Netherlands and Oiltanking Ghent N.V. in Belgium.
The consideration, including costs, will be €111 million (US$126.3 million) from 3i Infrastructure.
The firms provide storage and related services for refined oil products, chemicals and biofuels. Both companies provide essential services and benefit from locations, facilities and operational capabilities that give them strong appeal to their customer base, which includes stockholding agencies, oil companies and traders.
Both terminals are located in the ARA (Amsterdam, Rotterdam, Antwerp) region in Europe, one of four global hubs for the oil industry. The region benefits from its proximity to North Sea oil production and European refinery capacity, its high quality ports infrastructure and its strong connectivity, via pipeline, road, rail and inland waterway, to European consumers of refined products. Current oil market conditions have increased demand for storage capacity and, while these terminals are almost fully let, they are well placed to benefit as contracts are renewed.
The investment follows 3i Infrastructure's acquisition of a 45% stake in three Oiltanking storage terminals (Amsterdam, Malta and Singapore) in 2007. 3i Infrastructure's stake, held through its Oystercatcher subsidiary, was valued at £108.7 million at 30 September 2014.
Oiltanking is one of the world's leading independent storage operators, in an industry where reputation, for safety, quality and customer service, is paramount.
Completion of the transaction remains conditional upon receiving certain regulatory approvals, including clearance from the European Commission under the EU Merger Regulation.
Peter Sedgwick, Chairman, 3i Infrastructure, commented:
"We are pleased to announce today's investment in a Core infrastructure opportunity, which fits our criteria of investing in businesses with clear infrastructure characteristics that deliver attractive risk-adjusted returns to shareholders. In particular, the Oiltanking companies benefit from long-term demand fundamentals due to their location and the continuing need for storage of refined oil and chemical products."
Ben Loomes and Phil White, Managing Partners and Co-heads, Infrastructure, 3i Infrastructure, added:
"We are delighted to be investing further alongside Oiltanking, a known and trusted partner to us since 2007 and a world leader in independent storage terminals. Our existing knowledge of the Oystercatcher business and the market, combined with an excellent relationship with Oiltanking, makes us a natural partner to invest in these two additional storage terminals. We look forward to working with Oiltanking to further develop these businesses."