Will Shipping IPOs Comeback in 2019?
The market for Initial public offerings (IPOs) across the global shipping industry has remained understandably muted in recent years but secondary offerings continue to be an important funding mechanism, according to a recent report from Drewry Maritime Financial Research.
Despite low interest in shipping IPOs in the US over the last few years, listed shipping companies continue to raise money through secondary/additional offerings and bond offerings in the US market with Oslo emerging as the preferred platform for shipping companies to raise equity.
Investor appetite for shipping sector IPOs has remained weak as earnings have remained negative or sub-par at best, with Goodbulk and Navios Containers falling prey in 2018.
Goodbulk’s IPO failed in part because Star Bulk Carriers and Genco Shipping and Trading Ltd. - both backed by Oaktree Capital Management - completed a secondary offerings just before GoodBulk’s planned launch. Given the failure of that IPO attempt, Navios Containers pulled its IPO in September 2018 and sought a direct listing on Nasdaq.
The US market has not witnessed a major listing from the shipping sector since the listing of Gener8 Maritime in 2015, which generated gross equity proceeds of $210m. Nevertheless, in the last three years, shipping companies in the US have raised $5.5bn through secondary and additional equity offerings.
“Stock markets across the world remained adversely affected in 2H18 due to global geopolitical issues revolving around the trade war between China and the US, global crude supply, a possibility of a ‘no deal’ Brexit’ and the partial shutdown of the US government,” said Kanikka Sachdeva, Equity Research Analyst, at Drewry Maritime Financial Research.
“With the financial performance of shipping companies gradually improving, the woes of investors with respect to negative returns and irregular dividend payments should in our view begin to be addressed. Similarly, we expect more shipping IPOs globally beyond 2H19,” added Sachdeva.