Shippers Turn to Equity Markets as Sector Eyes Recovery

MarineLink.com
Thursday, April 17, 2014
Photo courtesy OW Bunker

Shipping companies are turning to equity markets to fill a growing funding gap, betting that investors hungry for decent returns will provide capital to a sector recovering from its worst downturn since the 1980s.

Ship owners ordered large numbers of vessels between 2007 and 2009, just as the global economy sank into crisis. Prospects have brightened in recent months as world trade picks up and the ship glut is absorbed.

The industry still faces a multi-billion dollar financing hole after banks, its traditional source of funding, cut back lending to boost capital in the wake of the financial crisis.

Alternative investors such as private equity firms have been snapping up shipping assets including loan portfolios from the banks. Scenting an opportunity, shipping companies are now trying to take advantage of strong equity markets to seek out funds through initial public offerings (IPOs).

Avance Gas listed this week in Oslo. Germany's Hapag-Lloyd and Chilean peer Vapores agreed this week to a tie-up that will include a flotation in 2015. Principal Maritime Tankers Corp, backed by private equity group Apollo Global Management, last week filed with U.S. regulators to raise up to $100 million in an IPO.

Greece's Quintana Shipping and Bermuda-addressed Nordic American Offshore both filed in March to raise $100 million and $115 million respectively in New York IPOs.

Jesper Plenov, global head of equity capital markets at Danske Bank, said the bank placed A-shares in top shipping and energy group A.P. Moller-Maersk for 3.6 billion Danish crowns ($665.70 million) within just an hour and a half.

But the dash into shipping stocks comes with a health warning.

"Hopefully ... enthusiasm with offerings will not get out of control and encourage poor quality owners and projects on the roadshow circuit," said Basil Karatzas, a U.S. based ship finance adviser.

Steven Hollander of law firm Watson, Farley & Williams, said, "We see investor appetite, but the appetite is not going to buy shares at any price."

Not all shipping share sales have gone to plan.

Last week, Greece's Stalwart Tankers scrapped a listing, the same day that Britain's Quantum Shipping, backed by billionaire Idan Ofer, dropped a planned $200 million private placement. That came despite European secondary offerings of shares last week reaching their highest year-to-date levels since records began, according to Thomson Reuters data.

U.S.-based oil products tanker group Diamond S Shipping also backed out of an IPO in March despite the support of leading global investor Wilbur Ross.

"There's certainly been a wariness about overpaying, and watchfulness about company valuations against the underlying value of fleet," said John Ong, managing director of corporate finance and capital markets at ABN Amro. "Investors want to be thoughtful about who and what they're backing."

A source familiar with the Quantum deal said investors were quite demanding on price. "[Quantum] took the view that, given that they could fund their investment through their own resources, they didn't want to drop the price," the source said, adding they were keen to return to the market in 12-18 months.

Investor Sophistication
The more selective approach to shipping IPOs could be a sign that investors are growing more familiar with the industry.

Shippers carry a variety of goods from dry bulk commodities like coal and grains to oil, gas and containers full of consumer electronics, and demand for different products is volatile.

That can hit shipping firms hard as they often dash to order extra vessels when business starts to pick up, only to idle them when it wanes.

"Diamond S flopped partly because some people are getting a little nervous about the products tanker sector. The expected upturn might be strangled in its infancy because of over-ordering in the product tanker segment and also we haven't seen any real upturn as of yet," a ship finance source said.

As the wider IPO market revives, investors have a growing choice of companies and brands to invest in, allowing them to be more selective when it comes to shipping IPOs.

Stocks in shipping companies floated over the past year rose by an average of 4.4 percent on the first day of trade, against 27 percent for global IPOs, Thomson Reuters data showed.

After a month, shipping shares rose on average 5.4 percent, against 34 percent for recently-listed stocks as a whole.

Denmark's OW Bunker and Norway's Tanker Investments floated in March at the upper end of their price ranges but have since fallen 2.6 percent and 11 percent respectively.

"The shipping sector has been out of the IPO market for a long time and now it's coming back, and what's happening is the market is scrutinising each target more than previously," said Adam Kostyal, European head of listings for NASDAQ-OMX.

(By Jonathan Saul and Freya Berry; Additional reporting by Ole Mikkelsen in Copenhagen, Mia Shanley in Stockholm and Victoria Bryan in Frankfurt; editing by Carmel Crimmins and Tom Pfeiffer)

Maritime Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

CMA CGM to Launch New Joint Liner Service

CMA CGM S.A. announced it act in cooperation with China Shipping Container Lines (CSCL), Orient Overseas Container Lines (OOCL) and Pacific International Lines (PIL),

Swedish Club Results Show Improvement

The Swedish Club today announced its half-year results in which it reported that the club continued to demonstrate a solid performance in the first six months of

TMT CEO Files $100m IP Suit Over Vessel Sale

Hsin-Chi Su, Chairman and CEO of Today Makes Tomorrow Group (TMT) launched a suit in Texas federal court on July 28, 2014, alleging that a planned bankruptcy sale of three company ships, including M.

Shipbuilding

Ecuador Coastguard Orders Damen Patrol Boats

Damen announced it has recently signed a contract with AstillerosNavalesEcuatorianos (Astinave) to construct two Damen Stan Patrols (Spa) 5009 for the Ecuadorian Coastguard.

LNG America Selects Topside Designer for LNG Bunker Barge

LNG America has selected Taylor-Wharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000 cubic meter Gemini

MN 100: Brunswick Commercial and Government Products

420 Megan Z. Ave Edgewater, FL 32132 Telephone: 386 423 2934 E-mail: kelsey.nemeth@whaler.com Website: www.brunswickcgp.com CEO/President: Huw Bower Number

Tanker Trends

Second Tanker Waits to Load Oil at Libya's Reopened Port

A second tanker is waiting to load oil at Libya's Es Sider port, state-run National Oil Corp (NOC) said on Thursday, as the country's biggest crude export terminal

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

The World's Most Expensive Jones Act Tanker

The series highlighting the world's most expensive active vessels from online ship intelligence and information service VesselsValue.com focuses this week on the most expensive tanker vessel,

Bulk Carrier Trends

Week's Ocean-Going Shipbuilding Orders Sparse

Despite some media reports of more significant ordering, there is only one firm shipbuilding order to report in the drybulk sector, according to the latest Clarkson Hellas S&P Weekly Bulletin,

Star Bulk to Acquire 34 Drybulk Vessels

Star Bulk entered into a definitive agreement with Excel Maritime Carriers Ltd., and as a result, will acquire 34 drybulk vessels for an aggregate of 29.917 million

Russian Food Import Ban: Trucks Lose, Shipping Wins

Team Niinivirta, a Finnish family-run transportation firm, turned 60 this year, but its third-generation managers now don't know if the business will see Christmas,

Finance

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

Cuba Struggles to Attract Investors Despite Reforms

Cuba has yet to attract new foreign investors despite launching two major initiatives in the past year, a sign of the lingering caution over doing business with

Swedish Club Results Show Improvement

The Swedish Club today announced its half-year results in which it reported that the club continued to demonstrate a solid performance in the first six months of

Container Ships

Cuba Struggles to Attract Investors Despite Reforms

Cuba has yet to attract new foreign investors despite launching two major initiatives in the past year, a sign of the lingering caution over doing business with

CMA CGM to Launch New Joint Liner Service

CMA CGM S.A. announced it act in cooperation with China Shipping Container Lines (CSCL), Orient Overseas Container Lines (OOCL) and Pacific International Lines (PIL),

CMA CGM Chairman Visits Bow-Refitted Containership

During the recent call in Beirut, Lebanon, of the 'CMA CGM Columba', Mr. Jacques R. Saadé, CMA CGM Group's Chairman and Chief Executive Officer, visited the 11,400 TEU ship.

News

Video: On-water Helicopter Rescue Demo

A King County Sheriff's Helicopter performed a rescue demonstration using a new rescue platform before a group of attendees at this year's Maritime Security West Conference in Tacoma, Wash.

Second Tanker Waits to Load Oil at Libya's Reopened Port

A second tanker is waiting to load oil at Libya's Es Sider port, state-run National Oil Corp (NOC) said on Thursday, as the country's biggest crude export terminal

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

 
 
Maritime Contracts Maritime Standards Naval Architecture Navigation Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1654 sec (6 req/sec)