Libra Ramps Up Container Ship Buying, Bets on Upturn

Global conglomerate Libra is snapping up container ships, betting on a sector recovery and lower oil prices which will cut costs and boost profitability, the group's chief executive said.

Libra has proved adept at buying and selling assets since 2008 -- making significant returns on investments.

Shipping is battling overcapacity, linked to a glut of new vessels ordered during a boom period before the global financial crisis of 2007-2009, forcing operators to look for ways to overcome one of the worst slumps on record.

Leading container groups including Maersk are replacing older and smaller vessels with fewer but larger mega-ships to command better economies of scale. In contrast, Libra's shipping arm Lomar has been buying very small container ships known as feeders, Libra CEO and chairman George Logothetis said.

"We have been big believers in the container market for some time now. It is the oxygen of world trade. We bought a lot of ships over the summer," New York-based Logothetis said during a visit to London.

"If you go away from the bigger (container) ships, the order book on the smaller ships is very light and you have net fleet reduction."

Logothetis said the drop in marine fuel prices due to the slump in crude prices would help save millions of dollars a year on every container vessel for owners.

"The price of fuel, provided people were not unduly hedged, is literally like a cash stimulus package," he said.

London and New York-headquartered Libra Group, created in 2003, grew from a shipping business started in 1976 by Michael Logothetis. Libra is privately owned by the Logothetis family.

George, 39, took over running the shipping business in 1993. Between 2004 and 2007 it sold its fleet of nearly 70 ships at the height of a shipping market boom before the 2008 slump. He has said it made "a substantial amount of money" from the sale.

Libra's shipping unit started buying vessels again in 2009, investing $1.4 billion in 91 vessels since then including some dry bulk ships and tankers. Lomar expects to end the year with 74 vessels -- 50 of which are container ships.

The group recently sold its offshore fleet for around $100 million -- just before oil prices crashed. It made about another $100 million selling other vessels.

"I think we will buy some more (container ships in 2015). The feeders are our segment where we feel comfortable and where see the most upside," Logothetis said.

Libra has five core divisions comprising hospitality, aviation, shipping, real estate and renewable energy and other diversified interests including media and financial services. Since 2008, it has purchased $7 billion of assets, including the ship acquisitions.

Logothetis said the group was pushing ahead with its $500 million Greek investment programme despite political turmoil.
 

By Jonathan Saul