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Peter Georgiopoulos on shipping and capital markets

Peter Georgiopoulos on shipping and capital markets
For the past few years, the Connecticut Maritime Association (CMA) has organised a luncheon event in Manhattan, within walking distance of the “Hedge Fund Alley” around midtown. This geography reflects the migration of shipping back into the city, as financial players dominate the business.

This year’s lunch featured Peter Georgiopoulos, a native New Yorker who received the CMA’s coveted “Commodore” award in 2004. Georgiopoulos, who runs multiple companies across sectors, emphasized his hands on experience in shipping, before going to business school and then on to Wall Street.

He said to the many shipping professionals in the room “this is our time” and “we all have a value”. With remarks that expanded on Morten Arntzen’s keynote address at the Association of Shipbrokers and Agents - six weeks earlier, in Miami - Georgiopoulos talked about financial investors who “sometimes did not know what they were doing” and need shipping people around to clean up their messes, saying: “ .this could be the rebirth of a shipping industry in America”.

During a lengthy Q and A session, he clarified that he was referring to the human element, not to a renaissance of US. vessel construction. When asked about the likelihood of bankruptcies in the dry bulk segment, he said “we will see a lot of them…too many ships were ordered” and emphasized that: “the market needs to find its own level.”

Other questions focused on his notion of consolidation, which differs from that espoused by others where the focus is on market power, information and sometimes economies of scale. Instead, Georgiopoulos looks at the necessity of creating larger companies in order to attract large investors. He stressed the need for liquidity, where investors “can get in and out of companies”.

On matters of scale, he noted that, in some ways, raising $2bn for a corporate finance deal might be easier , where the banks might take a piece of a large deal, than raising $20m of bank finance- where the banks have pulled out. Georgiopoulos, a pioneer in the “private equity” space in the 1990’s with his Maritime Equity Management, which pre-dated General Maritime Corporation, his previous company- listed in 2001, described the capital markets as “dead for shipping right now”.

Referring to the lackadaisical stock market response to Euronav’s (EURN) raised dividend, he decried the disappointing pricing environment for listed tanker companies (and their hefty payouts amidst more than ample cashflows), and said that, among investors, “nobody cares” His own company, Gener8 Maritime (GNRT), was successful in raising more than $230m in June of this year, but he noted that, now, five months later, “it would be very hard to do what we did.”