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ESVAGT
DenmarkEnergy
Overview
Headquartered in Esbjerg, Denmark, ESVAGT is a leading provider of emergency rescue and response vessels (“ERRV”) and related services to the offshore energy industry in and around the North Sea and the Barents Sea. The company is also the market leader in the fast growing segment of service operation vessels (“SOV”) for the offshore wind industry.
Its ERRV services mainly involve the rescue and recovery of personnel, but also include the dispersion and recovery of oil spills, crew transfers and towing. ESVAGT is the leading provider of ERRV services in Denmark and Norway, with market shares of approximately 100% and 50%, respectively, as well as an established and growing presence in the UK. The majority of ESVAGT’s ERRV revenues are associated with North Sea oil and gas production support, with the remainder generated by supporting exploration activity.
ESVAGT is also the pioneer and market leader in the provision of SOVs to offshore wind farms, with seven bespoke vessels in operation and a further two under construction. SOVs are purpose-built, high performance vessels, providing efficient transport of maintenance technicians to wind turbines and other offshore wind equipment, under long term contracts. The offshore wind market, and hence demand for SOVs, is expected to grow strongly over the coming years, creating significant opportunities for the company.
ESVAGT has been operating since 1981, employs c.1,100 people and owns a fleet of c.40 vessels.
Recent developments
ESVAGT has established a leading position in the offshore wind service operation vessels (‘SOV’) market. Despite increasing interest from competitors, the business recently signed a contract with Ørsted for the world’s first green SOV which will service the Hornsea 2 wind park in the UK.
In the US, ESVAGT and its joint venture partner, Crowley, are exploring several SOV opportunities to service existing European customers.
ESVAGT’s emergency rescue and response vessel segment is also generating momentum due to increasingly attractive supply/demand dynamics and a renewed focus on security of energy supply in Europe.
An important multi-vessel contract was signed with Total Energies in Denmark in the year.
We recently appointed Soren Poulsgaard Jensen, ex-CEO of Scandlines, to the ESVAGT Board. He brings significant experience in the maritime sector and knowledge of working with 3i.
Investment rationale
3i Infrastructure acquired ESVAGT from AP Møller-Maersk and other minority shareholders in September 2015, in a consortium with AMP Capital.
ESVAGT has strong infrastructure characteristics and operates in an attractive market:
- It is a market leader in Denmark and Norway and has a small but growing presence in the UK offshore oil and gas market and in the expanding North Sea offshore wind sector.
- It is an asset intensive business, with a modern state-of-the-art fleet of purpose-built vessels.
- A high proportion of its revenues is contracted over the medium term with a diverse customer base featuring limited customer concentration, underpinning stable and predictable cash flows.
- It provides an essential service for the offshore energy industry in light of regulatory health and safety requirements, which constitutes a small component of the overall production cost, resulting in lower price sensitivity;
- It operates in a market with high barriers to entry, as customers require bespoke vessels, manned by experienced crews with a strong safety track record. The harsh weather conditions and language barriers also inhibit new market entrants based outside the region; and
- With its leading market position, strong safety track record and state-of-the-art fleet, ESVAGT is optimally positioned to exploit growth opportunities in the UK and potentially further afield, as well as in the offshore wind energy market.
Sustainability
SVAGT is maintaining its market position as the leading offshore wind service vessel provider. It has clear emissions reductions goals which tie back to the company’s aim of becoming CO2-neutral by 2035. ESVAGT’s strategy has been further advanced by the latest SOV design, powered by batteries and dual fuel engines, capable of sailing on renewable e-methanol.
Key facts83% Equity interestc.1,100 employeesc.40 vessels
