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 August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Syncrude Uncertain about Plant Fire Affecting Production

The operator of Canada's largest synthetic crude project said on Saturday it is investigating the causes of an early morning fire at an upgrading plant. Firefighters extinguished the blaze,

Hurricane Ignacio Gains Strength but Expected to Bypass Hawaii

Hurricane Ignacio intensified as it blew across the Pacific on a route likely to bypass Hawaii on Saturday, said the Central Pacific Hurricane Center of the National Weather Service.

United Heavy Lift Gears up for the Asian Boom

All set to expand its footprint in the South Asian market significantly, Hamburg based, United Heavy Lift (UHL) appointed strategically placed Lexicon Overseas Pvt Ltd.

Shipbuilding

MN 100: ContainerTug B.V.

The Company: ContainerTug B.V. is a specialized Dutch naval design engineering and construction company with a strong focus on developing workboats and the evaluation

Oman Drydock Company Expands Rapidly

Oman Drydock Company (ODC) is growing fast. In January, the yard hit an important milestone - its 300th drydocking. Harnessing the power of its new $1.8 billion, 1.

NASSCO Invests in Facilities, Equipment and People

General Dynamics NASSCO has invested several hundred million in capital projects as part of its efforts to increase efficiencies via  modular shipbuilding, including:

Bulk Carrier Trends

United Heavy Lift Gears up for the Asian Boom

All set to expand its footprint in the South Asian market significantly, Hamburg based, United Heavy Lift (UHL) appointed strategically placed Lexicon Overseas Pvt Ltd.

MES Delivers Bulk Carrier STH Athens

Mitsui Engineering & Shipbuilding Co., Ltd. (MES) completed and delivered a 60,000 dwt type bulk carrier M.V. STH Athens (MES Hull No. 1898) at its Chiba Works on August 27,

Break Bulk in Rotterdam on the Way Up

The opening of a new break bulk terminal is one of the many developments and investments in the break bulk sector in the port of Rotterdam; a sector that has

Finance

TASI Acquires SignalFire Telemetry

TASI HOLDINGS INC. announced today it has completed the acquisition of all shares of SignalFire Telemetry, located in Hudson, Massachusetts.  This new acquisition

DP World Profit Up 22%

Global marine terminal operator DP World today announced strong financial results from its global portfolio of marine terminals for the six months to 30 June 2015,

Med Crude-Russian Urals Edges Lower in Med, Baltic

Russian Urals crude weakened in the Mediterranean and in the Baltic on Friday, while trading activity was limited ahead of a long holiday weekend in Britain, traders said.

Container Ships

Marad Celebrates Deployment of Maritime Fuel Cell Project

The U.S. Department of Transportation’s Maritime Administration (MARAD) today celebrated the launch of field trials for the first prototype hydrogen fuel cell

DP World Profit Up 22%

Global marine terminal operator DP World today announced strong financial results from its global portfolio of marine terminals for the six months to 30 June 2015,

MN 100: ContainerTug B.V.

The Company: ContainerTug B.V. is a specialized Dutch naval design engineering and construction company with a strong focus on developing workboats and the evaluation

News

Syncrude Uncertain about Plant Fire Affecting Production

The operator of Canada's largest synthetic crude project said on Saturday it is investigating the causes of an early morning fire at an upgrading plant. Firefighters extinguished the blaze,

Hurricane Ignacio Gains Strength but Expected to Bypass Hawaii

Hurricane Ignacio intensified as it blew across the Pacific on a route likely to bypass Hawaii on Saturday, said the Central Pacific Hurricane Center of the National Weather Service.

United Heavy Lift Gears up for the Asian Boom

All set to expand its footprint in the South Asian market significantly, Hamburg based, United Heavy Lift (UHL) appointed strategically placed Lexicon Overseas Pvt Ltd.

 
 
Maritime Careers / Shipboard Positions Maritime Standards Navigation Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | 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: 0.6883 sec (1 req/sec)