New Fortress Energy Completes Sale of Stake in Energos Infrastructure
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Insights
The divestiture of a 20% stake in Energos Infrastructure by New Fortress Energy (NFE) to Apollo-managed funds is a strategic financial maneuver that aims to optimize NFE's balance sheet. The allocation of proceeds towards debt repayment is a prudent step, likely to be well-received by investors, as it may improve the company's debt-to-equity ratio and potentially lower interest expenses. This could enhance NFE's creditworthiness and possibly lead to a more favorable borrowing environment in the future.
Investing in accretive downstream projects signifies a focus on growth in areas that are expected to generate higher returns than the capital costs. For stakeholders, this suggests a strategic pivot towards more controlled and potentially higher-margin operations. The long-term charters with Energos indicate a commitment to maintain operational capabilities while shedding direct asset ownership, which could result in a leaner, more capital-efficient business model.
From an energy sector perspective, the sale reflects a broader industry trend towards asset-light strategies, where companies divest non-core assets to focus on their primary business operations. NFE's continued partnership with Energos through long-term vessel charters ensures stability in LNG delivery and storage capabilities, which is pivotal for maintaining service quality and reliability for their customer base. The transaction also underscores the importance of infrastructure in the LNG sector, with Energos's portfolio of Floating Storage and Regasification Units (FSRUs), Floating Storage Units (FSUs) and LNG carriers playing a critical role in the global LNG supply chain.
The mention of Energos's diverse customer base and long-term charters suggests a stable revenue stream for Energos, which could be beneficial for NFE in terms of predictable cash flows from the charter agreements. The strategic realignment with Apollo Funds can be seen as a move to leverage Apollo's financial and operational expertise to further enhance Energos's market position.
Examining the market implications, the transaction may signal to investors NFE's confidence in its growth trajectory and its ability to monetize assets effectively. By recirculating capital from the equity sale into high-return projects, NFE is demonstrating a commitment to value creation. The market will likely monitor the performance of the downstream projects to assess whether the redeployment of capital yields the anticipated accretive effects.
Additionally, the LNG market is highly competitive and sensitive to changes in global energy demand and supply dynamics. NFE's move to maintain a strong partnership with Energos and secure long-term charters could be seen as a strategic hedge against market volatility. It ensures a degree of operational flexibility and access to necessary infrastructure, which could be advantageous as the company navigates the complexities of the global energy market.
Summary Highlights
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NFE sells
20% stake in Energos Infrastructure to funds managed by Apollo - NFE to use net proceeds to repay debt and invest in accretive downstream projects
- NFE charters six LNG vessels from Energos today, and will continue to partner with Energos in the future to support significant growth at NFE’s downstream terminals
Energos is a global maritime infrastructure company formed by NFE and Apollo Funds in August 2022 to provide LNG delivery, storage, and regasification services to a diverse customer base comprised of utilities and energy companies under long-term charters. Energos owns and operates 13 LNG infrastructure vessels, consisting of 9 Floating Storage and Regasification Units, 2 Floating Storage Units, and 2 LNG carriers.
NFE currently charters six vessels from Energos and will maintain an active relationship with Energos to support NFE’s global operations through vessel charters for a period up to 20 years. These charters have either commenced or will commence upon expiration of each vessel’s existing third-party charter agreement.
“We are pleased to have established Energos with Apollo Funds, our joint venture partner, and to have built it into a premier LNG maritime infrastructure company today. Completing the sale of our interest to Apollo Funds allows us to recycle proceeds into high return downstream projects and to reduce debt," said Wes Edens, Chairman and CEO of New Fortress Energy.
About New Fortress Energy Inc.
New Fortress Energy Inc. (NASDAQ: NFE) is a global energy infrastructure company founded to address energy poverty and accelerate the world’s transition to reliable, affordable, and clean energy. The company owns and operates natural gas and liquefied natural gas (LNG) infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. Collectively, the company’s assets and operations reinforce global energy security, enable economic growth, enhance environmental stewardship and transform local industries and communities around the world.
About Energos Infrastructure
Energos Infrastructure provides critical infrastructure for the delivery, storage, and regasification of LNG through long-term contracts, helping to power countries around the world and reduce their reliance on oil and coal, enhance energy security and reliability, and enable potential cost savings. Energos’ asset platform serves a diversified customer base of utilities and energy companies worldwide under third-party charters.
About Apollo
Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade to private equity with a focus on three investing strategies: yield, hybrid, and equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of December 31, 2023, Apollo had approximately
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215396466/en/
For New Fortress Energy
Investor Relations:
Chance Pipitone
ir@newfortressenergy.com
Media Relations:
press@newfortressenergy.com
For Apollo
Investor Relations:
Noah Gunn
Global Head of Investor Relations
212-822-0540
IR@apollo.com
Media Relations:
Joanna Rose
Global Head of Corporate Communications
212-822-0491
Communications@apollo.com
Source: New Fortress Energy Inc.
FAQ
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