VH Global Energy Infrastructure (ENRG) has made the first disposal in its three-year wind-down, selling two oil storage facilities on the coast of Texas for $134m (£99m) to its fund manager Victory Hill.
The £298m investment trust said the sale agreement of the facilities at the Port of Brownsville on the Texas Gulf coast was a “significant milestone” for the managed realisation approved by shareholders last August. The capital will be returned through the issuance of B-shares, a method approved by shareholders in March.
The terminals are the largest investment in the portfolio, accounting for 28.5% of net asset value (NAV) at the end of last year. The company acquired them for $63m in April 2021 and since then has generated a 13.4% annual return or 1.78 times the total invested capital.
After a “comprehensive and competitive process”, chair Bernard Bulkin said the board concluded that the offer from Victory Hill Midstream CV was the “best available outcome for shareholders”.
This is a new continuation vehicle set up by fund manager Victory Hill Capital Partners so it can continue to run the storage facilities on behalf of a US-based energy investor specialising in second-hand, or secondary, assets.
In May ENRG said the terminals delivered strong performance in the first quarter, “driven by robust volumes through the facility”.
“The two liquid storage terminal assets have been a successful investment for the company, generating above target returns for shareholders, whilst delivering reliable cash generation throughout our ownership period,” Bulkin said today.
ENRG has previously stated that the Brownsville assets fitted the trust’s sustainable development and energy transition remit by helping to reduce the consumption of high sulphur fuel in Mexico.
It was paid availability and service based fees for the facilities which it ran with operating partner Motus Energy on behalf of PMI, the trading arm of Mexico’s state-owned oil company PEMEX.
ENRG’s remaining assets include a Brazilian hydro facility, a solar and battery storage portfolio in Australia and a carbon capture scheme in the UK.
ENRG shares rose 2.1% to 77p at the news. They closed last week on a 26% discount to their NAV of 103.8p at 31 March. The shares yield 7.7% but have returned a total of just 1.1% over five years after derating in 2022 and 2023 when interest rates and inflation rose.
