Hedge Funds Back Major Oil Ship Deal

Dec 7 2007 | 11:22am ET

With energy hedge funds enjoying strong returns in 2007, a group of hedge funds are backing an acquisition company buying nine enormous oil tankers for nearly $800 million.

Hedge funds own a large part of the float of Energy Infrastructure Acquisition Corp., according to Peter Blumen, a director of EIAC, which will become the Energy Infrastructure Merger Corp.

“Hedge funds are very interested in our structure, because we either pay them through the trust structure, or we make this acquisition, which has to exceed the trust payout for them to vote for it.”

Energy has been among the strongest-performing hedge fund strategies this year, rising more than 14% through September, according to Hedge Fund Research.

Blumen says Energy Infrastructure’s major shareholders include hedge funds Fir Tree Partners and Seraphim Management.

As part of the deal, EIAC will merge with EIMC, a wholly-owned subsidiary created to buy the large crude carriers from Vanship Holdings. Under the terms of the agreement, Vanship will also invest up to $50 million in the new venture.

Energy Infrastructure’s “management and board are experts in M&A and energy, so [the hedge funds] gave us the latitude to pursue the acquisition,” Blumen said.

The deal—EIMC is paying $778 million for the ships—follows a year and a half of work seeking to identify an acquisition target. Blumen said EIAC considered “a broad array of energy assets,” not limiting itself to crude containers. The group is now ready to “go out of M&A mode and into execution mode,” operating the ships as a going concern, Blumen said.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.