Marred by weakness and volatility in the energy sector globally, Singapore grown oil and gas exploration and production firm Loyz Energy has planned to diversify into fund management, investment and trading in a bid to reduce its reliance on the original business and increase revenue streams.
To enter into the investment business, Loyz has inked a deal with locally headquartered multi-asset investor Arctos Investments Pte to form a new joint-venture company FIT Global Pte Ltd that will be engaged in the fund management business.
“The principal business of the JV Company shall be (a) investment, including private equity deals, pre-initial public offerings (mature stage), initial public offerings, fixed income and hybrid instruments, (b) trading, including the trading of equities, commodities and other financial instruments, including cryptocurrencies, (c) fund management and (d) market making for commodities,” Loyz said in an announcement on Friday.
The venture will be co-managed by a team of experienced investment professionals lead by Wong Yat Foo, an investment veteran in the capital markets.
While, Arctos Investments will assist the joint venture firm to get a fund management licence from Monetary Authority of Singapore, Loyz will seek approval from its shareholders for the business diversification proposal.
The company announced that the proposed joint venture FIT Global will have an issued and paid-up capital of SGD 1 million, which Loyz Energy shall contribute the entire amount in cash while Arctos Investments shall contribute by ways of its network, team of investment and trading professionals, and risk management expertise.
As part of Arctos investments’ contribution, Loyz Energy shall also issue such number of fully paid-up new ordinary shares in its capital at an issue price to be agreed, amounting to SGD1 million, to Arctos Investments.
With the continuing weakness and volatility in the oil price environment which has persisted since 2014, there are global concerns to both oil and gas producers as well as oilfield services operators resulting in a worldwide reduction in all activities in the exploration, development and
production of oil and gas. Brent Crude Oil is currently trading over $54 a barrel as compared to over $100 a barrel before 2014.
“As a result of which, the Group expects the conditions for the Original Business to remain challenging for some time. The Proposed Diversification would reduce the Group’s reliance on the Original Business by diversifying its revenue stream, as well as improve future prospects and better support the growth of the Group, so as to enhance Shareholders’ value for the Company,” said Loyz.
The group’s revenue for the quarter ended June 30 tanked 38.3 per cent to $1.6 million as compared to previous year on account of lower share of oil production volume from its Thailand concession. In fact, the renegotiation of acquisition of a Thailand concession the company did with Carnarvon Thailand helped the firm to return in black in the fourth quarter as compared to a net loss in the previous year’s quarter.
“Through our efforts in streamlining non-performing oil and gas assets, the Group is left with our 20 per cent stake in the producing onshore oilfields in Thailand. We are entering into a new business to augment our income and cash flows, and partnering with Arctos Investments, which has a good team of experienced investment professionals, will give us an immediate boost in our new business initiative,” said Loyz CEO and Executuve Director Jeffrey Pang.