Investor Documents

June 16, 2023

Petrax Global floats PPM to increases equity by $200 million to provide liquidity in volatile energy market

The US based energy trader Petrax Global announced today that it is pressing to increase its equity by issuing 200 million new shares through a PPM from its owners, and institutional investors. High energy prices have increased the need for financial solidity and by maintaining a strong financial position, Petrax Global will be able to provide needed liquidity to a volatile energy market.

Since entering the energy trading business, Petrax Global focused on its Dubai unit first and then expanded to Houston as its second branch followed by Singapore and then London. Financial robustness is now very important as high energy prices and extreme price volatility have put an unprecedented pressure on the liquidity of energy trading companies.

”When prices go up, so does the size of margin calls on the energy exchanges. Trading companies like Petrax Global must post collateral to cover potential price fluctuations in the period from when a trade is struck to when the energy is actually delivered. In other words, significant financial strength is needed to ensure continued cross-border trading in Europe, the North America, West and East Asia,” says Frank Khoie, Executive Chairman at Petrax Global.

The high energy prices are mainly caused by an energy supply shortage as there has not been enough energy accessible in Europe to match demand since Russia is suffering under sanctions after her attack on Ukraine. When supply does not match demand, and energy prices go up, we need an efficient market to cushion the price volatility. In an efficient market, you need a buyer and a seller, able to post the collateral needed to execute the trades that move energy from areas with surplus production to areas with supply shortages. That is why liquidity is a prerequisite for the cross-border trading that is needed to ensure security of supply and curtail the most extreme price shocks,” Frank Khoie explains.

At a time when European energy markets are experiencing massive pressure on supply, efficient cross-border trading is key to making the most of available energy resources. This is an important part of Petrax Global decision for raising another $200 million to increase equity and plans for securing greater trading credit facilities with banks.

“We are very excited with the launch of Petrax Global and our hope to play a role in contributing to functioning energy markets. As a new company we focus on building a strong financial base which is very important in energy trading business and that is why we are pushing with capital increase through PPM to further strengthen our financial position. We realize that in order to position Petrax in a market environment which requires a high degree of liquidity to function as well as to prepare for continued growth, we need to raise more capital in the market”, says Vincent Loh, head of Singapore unit and Board Member in Petrax Global.

The European Union Agency for the Cooperation of Energy Regulators (ACER) states in a report from April 2023 that cross-border trade delivered 34 billion euro of benefit to society in 2022 by ensuring an efficient energy system, preventing blackouts and smoothening price volatility despite the interruptions caused by Russia’s invasion of Ukraine and subsequent economic sanctions on Russia.