EVENTS l TANK STORAGE GERMANY REVIEW
AN ACTIVE EXPANSION AND INVESTMENT MARKET A shift in fund structures may not have meant much before – but the industry is now taking note of the fact that investors are increasingly interested in allocating funds to the storage market. During the 2016 Tank Storage Germany conference, delegates learnt how infrastructure investment is focusing more on tank storage as a viable investment. The role tank storage plays in the supply chain, the product mix it can accommodate and location creates an attractive business proposition by offering long-term, predictable cashflow generation. Robert Hardy, investment principal at J.P. Morgan Asset Management, explained that the traditional fund structure of 60/40 is no longer working and that people are moving to other areas such as infrastructure investment, which is a low volatile asset class. He said: ‘Investors are seriously looking at capital to allocate to infrastructure. Investor sophistication is increasing – they want the
same investment characteristics but in a different infrastructure sub section. ‘Investors have different risks and return appetites – one size does not fit all. There are a whole range of different investors on the market but they are looking to be more tailored.’ Frank Schreurs from In-Energy echoed this positive sentiment by explaining that EBITDA multiples are going up and are currently in the 7x to 12x range. He said that as a result of new players in the market, there is greater competition for some of the more mature assets, which has driven up prices. Additionally, some storage operators are backed by infrastructure investors and this is a trend that is set to continue he said. ‘Storage operators are investing in terminals and this is a growing business. Infrastructure assets are becoming more competitive – there is between 3% to 5% build up return from tank terminals.’
DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6
ADDITIONAL STORAGE CAPACITY This growing investment in storage terminals has been noted in the amount of additional capacity that has been commissioned in response to growing demand from supply chain players as well as to add flexibility to changing market dynamics. Ruud van Stralen noted that over the last five years, 25% of storage capacity has been added in the ARA region. ‘The last two years have been very good for the market and this has been reflected in the rates. There is a lot happening in the market for capacity additions and acquisitions.’ And this growth trajectory shows no sign of slowing down. Van Stralen said that 3.5 million m3 of new build capacity is in the pipeline for the ARA. Focusing on tank storage in Germany, which remains a stable and steady market, a new player has emerged as a crucial link in the country’s supply chain as well as a competitor to the neighbouring ARA region. Sven Partzsch, MD of HES Wilhelmshaven, explained that the former naval base and Second World War submarine base underwent a significant redevelopment programme to make it more flexible and accommodate more customers. The facility now supplies part of the German petrochemical industry with feedstock and also has underground salt caverns, which offers additional, potential storage capacity. ‘The terminal can play a vital role to make this underground capacity usable, particularly in the contango market situation as everyone is looking for storage,’ he said. ‘The facility is a sound economical alternative for tank capacity.’ There were also presentations covering product demand, refining and trade flows in Europe, changes to the shale industry and an outlook on the global chemical market. Delegates were also given insights on the inspection and maintenance of tank farms and tank lining and coating operations. Tank Storage Germany returns to the Hamburg Messe on November 29 and 30, 2017. For more information visit www.tankstoragegermany.com.
79