Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Two-stage, IPO-directed exit strategy likely for private equity investors in shipping

Two-stage, IPO-directed exit strategy likely for private equity investors in shipping
While the private equity (PE) money that rushed into the shipping market a few years ago should be looking to make an exit soon, the strategy is looking more likely it will be a two-stage play.

The strategy would first be a merger to gain scale before ultimately looking to list the enlarged unit, an audience at the Marine Money Hong Kong Ship Finance Forum was told on Tuesday.

"In the dry, wet and offshore sectors, returns between 2011 and 2014 have been disastrous," said Tiger Group Investments managing director Julian Proctor.

"The PE guys have only been there for two or three years but I think now they will be going away and I don't think they will be back very soon and we will see a completely different type of more traditional investor taking over this market again," said DVB Group Merchant Bank (Asia) senior vice-president shipping and intermodal investment management Edwin Jager.

DNB Markets Investment Banking md and regional head Joachim Skorge predicted that by the end of the year there would be more shipping companies trying to list, and this trend would be especially prevalent among small to mid-sized companies that need to scale up to compete. These would naturally need to merge before trying to go for a listing in either New York or Oslo.

"We will see PE and hedge funds start to adjust portfolios over the next two years as there will be structural reasons for them to exit such as monthly or quarterly mark-to-market issues," concurred Proctor.

"We will see a consolidation among like-minded players in dry bulk distressed assets," added Clausius.

All this combined with an "anaemic" buying market will see the market becoming "relatively efficient" concluded Proctor.