Opportunities across shipping and offshore sectors: Capital Link Shipping Form debates the options, By James Brewer
Act quickly to snap up opportunities for financing assets: that was the message to operators of shipping and offshore hardware from speakers at a business and investment session of the Capital Link Shipping Forum analyst and investor day, as Posidonia 2014 got underway.
A series of challenging questions was put to a panel of Greek entrepreneurs by Sofia Kalomenides, partner for central and southeast Europe accounts at transaction and advisory group EY, who began by asking which one of shipping and offshore energy investments was the better choice.
George Economou, chairman, president and chief executive of Dryships, replied confidently: “Offshore. The margins are better, the contracts are longer, and you can forecast your cash flow better.”
George Prokopiou, chairman of Dynagas LNG Partners, recalled ordering ships 10 years ago without charters when his view was that the spot market would develop. Newbuilding prices had been drifting lower for 15 years, but the time for a similar move had gone.
Evangelos Marinakis, chairman of Capital Product Partners, recommended that companies should be diversified, a view echoed by Nikolas Tsakos of Tasakos Energy Navigation, who cautioned that diversification was wise “as long as the company has the infrastructure.” He added: “I think a private company can afford to be diversified, but I am not sure the public markets are ready to accept diversified shipping companies.”
Has access to traditional bank financing improved, asked Mrs Kalomenides, and are the margins attractive? Ted Petrone, president of Navios Maritime Acquisition, indicated the answer was yes: his company had recently done a debt refinancing. The phone kept ringing in the Navios office in New York. “There has been a rediscovery.”
Are your transactions being priced within the right range, the moderator persisted in asking. Mr Economou: “The market is the market.” Mr Tsakos: “The windows of opportunity are short and far between, so it is a good time. We were able to raise more than $300m in the last 11 months by choosing the right opportunities and times. It is expensive, but when you need to grow you have to use it.”
Mr Petrone added: “The depth and value that come out of the New York market are second to none.”
Mr Prokopiou said: “Until November last year, we had never gone to the capital markets. It is inevitable to look at alternatives to the capital markets. If you can offer quality services, the market is supporting you. Traditional bank finance and recourse to capital markets is the best combination for companies, going forward.”