The National Shipping Company of Saudi Arabia, known as Bahri, and Saudi Aramco yesterday agreed to merge their merchant fleets in a US$1.3 billion (Dh4.77bn) deal.
The move willcreate the world's fourth-largest tanker operator.
Under a non-binding memorandum of understanding (MOU) both companies will work towards incorporating the ships, workforce and business systems of Vela International Marine, a wholly owned subsidiary of Saudi Aramco, into the Bahri corporate structure.
Both sides are working to have a definitive agreement by the fourth quarter, with a view to completing the transaction next year.
The new company will have 77 vessels in its fleet, which will number 32 of the largest class of tankers - VLCCs (very large crude carriers), 20 chemical tankers, five product tankers and four roll-on roll-off ships. The company will also have 16 vessels under construction.
The deal will make Bahri the fourth-largest owner of VLCCs globally, after Norway's Frontline, and Japan's MOL and NYK. Under the deal, Bahri will provide transport services to Saudi Aramco on commercial terms, leaving the company to continue managing the country's crude oil marketing and sales directly with its customers.
"By creating a new global leader in shipping, Saudi Aramco hopes to build a strong company that can leverage its capabilities in the shipping sector and would meet its growing business portfolio," said Saudi Aramco's president and chief executive, Khalid Al Falih.
"This company in turn will serve as a national champion that will promote the development of a thriving national maritime industry that creates jobs and other long-term opportunities for the kingdom," he added.
"This is a transformational step for Bahri to strengthen its strategic partnership with Saudi Aramco and offers expanded future growth opportunities to create long-term value for our shareholders," said Bahri's chairman Abdullah Al Rubaian.
Under the terms of the transaction, Bahri would pay Vela a total consideration of about $1.3bn made up of a cash payment of $832.75 million in addition to 78.75 million new Bahri shares to be issued to Vela at an agreed price of $5.93 per share, representing a 20 per cent shareholding in Bahri.
The company is considering raising the cash consideration through debt financing from a number of sources.
It has appointed JPMorgan Capital Saudi Arabia as a financial adviser for this transaction, while Aramco has appointed HSBC Saudi Arabia as its adviser.
The proposed transaction is subject to a number of conditions and regulatory approvals, including completion of satisfactory legal, financial and technical due diligence, negotiation and agreement on the terms of the definitive transaction documents, approval of the transaction and related capital increase by Bahri's shareholders and obtaining regulatory approvals.
Bahri, which employs 1,322 seafarers and 332 shore staff globally, is a joint stock company listed on the Tadawul, Saudi Arabia's stock exchange.
Vela International Marine manages the world's largest VLCC crude-oil transport system, using more than 50 VLCCs on full-time charter as well as its own fleet of 14 VLCCs to support Saudi Aramco's crude transport requirements worldwide.
Vela employs about 800 seafarers and 150 shore staff.
dblack@thenational.ae
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The specs
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The Saudi Cup race card
1 The Jockey Club Local Handicap (TB) 1,800m (Dirt) $500,000
2 The Riyadh Dirt Sprint (TB) 1,200m (D) $1.500,000
3 The 1351 Turf Sprint 1,351m (Turf) $1,000,000
4 The Saudi Derby (TB) 1600m (D) $800,000
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6 The Obaiya Arabian Classic (PB) 2,000m (D) $1,900,000
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HIJRA
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Sharad Nair recommends three investment apps for UAE residents:
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The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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Game Changer
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Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
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MATCH INFO
Uefa Champions League final:
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Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
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Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
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THE BIO
Family: I have three siblings, one older brother (age 25) and two younger sisters, 20 and 13
Favourite book: Asking for my favourite book has to be one of the hardest questions. However a current favourite would be Sidewalk by Mitchell Duneier
Favourite place to travel to: Any walkable city. I also love nature and wildlife
What do you love eating or cooking: I’m constantly in the kitchen. Ever since I changed the way I eat I enjoy choosing and creating what goes into my body. However, nothing can top home cooked food from my parents.
Favorite place to go in the UAE: A quiet beach.
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
How to vote in the UAE
1) Download your ballot https://www.fvap.gov/
2) Take it to the US Embassy
3) Deadline is October 15
4) The embassy will ensure all ballots reach the US in time for the November 3 poll
UAE currency: the story behind the money in your pockets
Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
