A full house eagerly listening for the money …matters
Shipowners should not despair of attracting investors, despite a slowdown in deals, Capital Link Shipping Forum hears during Posidonia week, By James Brewer
Windows of opportunity are still opening for raising money to support the highly capital intensive industry of shipping, but investors need to hear a ‘chunky’ and appealing story. This perspective emerged from a panel discussion at the Capital Link Shipping Forum in Athens, although participants had somewhat different takes about the direction of travel.
Nicholas Stillman, managing director of investment banking at Clarkson Capital Markets, said that over the last 12 months investors had been buying assets cheaply – tankers, dry bulk, containerships, “it did not matter what it was.” They wanted charter rates to be low to help them get the best price for those assets. A second set of investors were more interested in cash flow, and were charter rate-focused.
Now, “we are in a bit of a predicament. Asset prices have moved 20% to 25% off the bottom. The ‘distress’ guys are not interested n chasing the market further.” A lot of initial public offering plans were on hold, pending charter rate developments. “Right now, we have seen a pull-back in deal activity.”
Mr Stillman said that levels of $300m market capitalisation were too low in the investment proposition context. “Ideally you would like to have more scale, raising $150m as a minimum size.”
Steven Williams of Morgan Stanley, whose firm has raised more than $4bn for shipping in a decade, said that current activity was mainly from institutional buyers in the US, but added: “there have been investors who have lost money. There are paper losses at a number of private equity groups around the world.” The ‘distress’ investor had looked at transactions, “and played them very sporadically.”
He advised ways of attracting investor attention were to “be visible” and have something “sizeable, chunky, sustainable” to offer. The key was simplicity, telling a message that resonates with investors.
“Investors are focused on one thing, and one thing only: total return to shareholders. There are investors interested in the right situation, there is money to be had, ” insisted Mr Williams.
Lawrence Glassberg, managing director for investment banking at Maxim Group, said that his group focused on companies with $500m market capitalisation and below. “We believe that there is a strong market, and there is demand from investors, ” he said, but admitted: “it is very difficult to keep up with the markets. The markets open and close very quickly, and “a large mega-cap ipo is not necessarily the way to go.”
Erik Helberg, chief executive of RS Platou Markets AS, added: “There have been a lot of investable companies without legacy issues. Now you are seeing strong platforms with growth potential. Now we have a lot of good companies building their fleets, getting ships delivered.”
Mr Glassberg ended on an upbeat note. “We do not know when the windows are coming, but when they are open, cash is going to flood into transactions.”
