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3i pumps €111m into oil storage businesses

The UK-listed firm’s infrastructure arm has invested in two companies owned by Germany’s Oiltanking, adding to the three terminals it initially backed in 2007.

3i Infrastructure has acquired 45 percent of Netherlands-based Oiltanking Terneuzen and Belgium’s Oiltanking Gent, two oil storage businesses owned by Hamburg-headquartered Oiltanking.

The London-listed firm paid €111 million for the stakes, an investment that follows its purchase of holdings of similar sizes in three Oiltanking storage terminals in Amsterdam, Malta and Singapore in 2007. These earlier investments were made via a holding company dubbed Oystercatcher, which will was not used to invest this time round, a spokesperson for 3i told Infrastructure Investor.

The transaction does not initially involve any debt, though the spokerperson said the long-term financing of the investment would be re-assessed “in due course”.

Oiltanking terminals provide storage and related services for refined oil products, chemicals and biofuels. Their customers include stockholding agencies, oil companies and traders.

The Ternuzen and Gent businesses are located in the ARA (Amsterdam-Rotterdam-Antwerp) triangle, which is deemed to be one of the four global hubs for the oil industry. The drop in oil prices since the middle of last year has increased demand for storage capacity. While these terminals are nearly fully let, 3i said in a statement, they stand to see strong activity as contracts are renewed.

The ARA region benefits from its proximity to North Sea oil production and European refinery capacity, as well as from its strong links – via pipeline, road, rail and inland waterway – to European consumers of refined products.

“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,” said Peter Sedgwick, chairman of 3i Infrastructure.

3i Infrastructure’s stake in Oystercatcher was valued at £108 million as at 30 September 2014.