Private Equity Knocks on Shipping's Door

By George Backwell
Tuesday, August 19, 2014

Shipping is currently attracting a great deal of interest from investors in the private equity sector, according to UK-based accountants Moore Stephens, members of shipping trade organization Maritime London and as reported in its fortnightly 'London Matters'.

In its Shipping Group newsletter 'Bottom Line' Moore Stephens notes that it has been estimated that at least USD7-bn  of private equity funding could find its way into shipping this year.

The shipping industry, however, still accounts for only a tiny percentage of overall private equity investment, so there is arguably scope for significantly more.
The timing appears to be good. A shipping industry emerging from a protracted slump offers potentially exciting opportunities for private equity investors. Newbuilding prices are
relatively low, so it makes sense for private equity funds to invest in them.

Freight rates have not yet returned to the sort of levels which would normally have private equity investors reaching for their cheque books, but they are no longer in the doldrums. In fact, according to Moore Stephens, there is a reasonable expectation that, if rates rise and values recover, the returns in the next few years will be above the long-term average.

Tonnage ordered now may be in the water at a good point in the industry up-cycle, according to Moore Stephens. Therefore investors should be able to sell promptly for a good price, should they choose to do so. IPO would be one of a number of exit strategies. This fits well with the comparatively short-term horizons of private equity funding, which are generally reckoned to be of a five-year duration.

Moore Stephens list a number of private equity firms involved in recent successful  shipping deals : Oaktree, Blackstone, Riverstone and KKR. These, among others, are all examples of significant investments into shipping at a low point in the shipping cycle. There is a clear 
incentive for others to take the plunge. Moreover, private equity could provide a viable funding option for shipping company senior executives looking to set up on their own. Experienced professionals with a thorough knowledge of the industry are just the sort of people with 
whom private equity should be looking to do business, so it is a perfect example of goal alignment.

Source: Maritime London
/Moore Stephens

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

People & Company News

Madsen to Chair Norway’s Research Council Executive Board

Henrik O. Madsen appointed chairman of the executive board of the Research Council of Norway   DNV GL president and CEO Henrik O. Madsen was appointed as chairman

Port of Houston Expecting Record Year

The Port of Houston Authority is expecting 2014 to close as a banner year for the port, with 34 million tons of cargo handled through November, Executive Director

Hapag-Lloyd Completes CSAV Merger Capital Increase

Hapag-Lloyd completed the planned capital increase of EUR 370 million (approximately $452.5 million) as part of the business combination with the Chilean shipping

Finance

Larger Tankers May Offer Better Return Chances

Investors looking for returns in the tanker markets can invest their capital in a variety of ways. Should an owner invest in a VLCC or an Aframax? How about an

US Plans to Shut Royalty Loophole on Coal Exports

U.S. coal companies will no longer be able to settle royalties at low domestic prices when they make lucrative sales to Asia according to reforms proposed by the Interior Department on Friday.

Hapag-Lloyd Completes CSAV Merger Capital Increase

Hapag-Lloyd completed the planned capital increase of EUR 370 million (approximately $452.5 million) as part of the business combination with the Chilean shipping

Vessels

Damen Outfitting First of Nine Bahamas Patrol Boats

The first of nine Damen Stan Patrol 3007s ordered by the Royal Bahamas Defense Force has arrived at Damen Shipyards Gorinchem in the Netherlands for outfitting.

MARAD Publishes US ATB, ITB Database

The U.S. Maritime Administration (MARAD) released what it is calling a first-of-its-kind public database that chronicles U.S.-flagged, privately owned domestic

New Chinese Shipyard Launches First Ship

The new shipyard facility of Honghua Offshore Oil & Gas Equipment Company in Jiangsu, China, has launched its first ship, an IMT982 Platform Supply Vessel. The vessel,

 
 
Maritime Contracts Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Salvage 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: 0.1237 sec (8 req/sec)