Tankers offered a high note- in particular, the presence of Ridgebury Tankers with its cfo, Hew Crooks, acting as conference chair, and its ceo, Bob Burke, effectively taking the role of conference keynote speaker) dominated the room. Many of the sessions took on the style “chats”, mostly sans Powerpoint, in the style of well known TV personality Charlie Rose, most notably Burke being interviewed by Scorpio Group’s Robert Bugbee.
In a year that seen a dearth of marquee deals, the conversation was dominated by two tanker transactions- a $150 m private equity raise by Ridgebury going towards a quartet of VLCC’s, and the IPO by Peter Georgiopoulos’ Gener8 Maritime raising $210m. In the de rigueur presentation on Private Equity, Pareto banker Niels Lyng-Olsen mentioned the Ridgebury deal, as well as Alterna Capital’s “American Phoenix” deal “where a good deal became a great deal” as examples of successful exits.
The Burke interview, clearly the highlight of the long day, delved into philosophy as much as actual tactics- with Burke emphasizing the need to continually network saying: “you don’t always know where the next deal will come from…it’s a numbers game…” hence the need to be networking.
A big-picture speaker, Mark Williams, head of research at Affinity Shipbrokers, noted that tanker market development had exceeded earlier already bullish forecasts, but voiced great concerns about new rounds of Quantitative Easing, saying: “Policy actions by governments and central banks are bending and distorting financial and physical markets, with effects on shipping.” His concerns included disruption of traditional trades in an environment bordering on deflationary, with the corollary prospect of cheaper ships from Japanese and Korean yards. Nevertheless, he waxed enthusiastic on the oil sector, noting increased demand from emerging markets, and growing distances in the tanker trades. Gas was also given high marks, with “plenty of projects”, and the advent of LNG bunkering.
The news for dry bulk was dour; the opening speech by Evercore’s expert on all things China, Donald Strazsheim, suggested , famously, that “even Beijing does not believe their own 7% numbers,” referring to China’s economic growth reports. He added, “Right now, China’s economy does not look very good,” citing structuring problems with the housing industry, and the disconnect between the actions of China’s state-owned enterprises and market forces. Affinity’s Mark Williams also took a dim view on the dry side, citing the end of the commodity super-cycle.
But, shipping always surprises, so dry bulk attracted considerable attention. Speaker Christoph Toepfer, who runs Borealis Maritime, with support from investor KKR), invoked behavioral economics , implying the crowd-defying nature of shipping, “If we all believe it’s going to be good, it won’t happen…and if everyone thinks it will be bad for the next five years, it’s actually the opposite,” Toefper suggested that his fund - now in iteration No.3 - has gained dry cargo exposure through a bank portfolio it acquired from Commerzbank, adding, “at this point in the cycle, we were actually reasonably happy to take some dry cargo exposure.” Another pleasant countercyclical surprise came from ING Bank, with managing director Adam Byrne saying: “This year, we’ve been active supporters of the dry bulk industry.”
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