Prostar Capital has acquired a majority stake in an oil storage facility adjacent to its existing investment at the Port of Fujairah, in the United Arab Emirates, through its Asia-focused energy fund and a co-investment arrangement with an unnamed US pension.
By acquiring a 100 percent stake in Socar Aurora Terminals from the existing controlling stakeholders, the US midstream energy infrastructure specialist gained 90 percent control of Socar Aurora Fujairah Terminal.
The terminal was a joint venture between State Oil Company of Azerbaijan Republic (SOCAR), Swiss-based commodity trader AURORA Progress and the government of Fujairah. The asset was ranked one of the best-performing storage terminals in the port, with 352,000 cubic metres of refined petroleum product storage capacity, according to Prostar.
The facility has a land bank with the potential to add more than 1 million cubic metres of new storage capacity, which Prostar has the option to pursue further down the line. The firm believes future developments in the port will create significant storage demand upside.
Transaction details were confidential, a Prostar spokesperson said. He added that more than 75 percent of the available capital commitments in the fund have now been deployed.
Prostar has increased its stake in the Fujairah Oil Terminal, which is adjacent to its latest investment, in between 2013 and 2015. The Port of Fujairah is the second-largest bunkering port in the world after the Port of Singapore, representing a strategic key hub in the storage and transport of energy globally and particularly to Asia.
The investment is part of the firm’s strategy to develop a diversified portfolio of investments in the storage sector. After closing the Prostar Asia-Pacific Energy Infrastructure Fund on $400 million in late 2016, the fund manager has been building a portfolio comprising several oil storage terminals across China, South Korea, Indonesia and the UAE. The fund is understood to seek a high-teens return target.
Last May, Prostar teamed up with BlackRock to acquire a controlling stake in a Korean city gas distributor in a deal valued at $500 million.