Family Office

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

Alasdair Graham, 7 November 2022

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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.

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