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Asian shipowners should use regional bourses when IPO market returns

Asian shipowners should use regional bourses when IPO market returns
Shipping companies looking to tap on the capital markets may do better in their respective local or regional bourses, but it remains unclear when the weakened capital markets will recover to offer such opportunities, said a panel of industry players.

“Unfortunately at the moment, the IPO window is effectively closed. In terms of the capital market, there is not much action in Asia. But things can change again in the very dynamic shipping market,” said Joachim Skorge, managing director and regional head at DNB Bank.

While Skorge was a little hesitant in affirming any near term positive prospects for the shipping capital market, there remains pockets of interest from investors in markets like Oslo, Norway.

However companies could be better off seeking investors in their local or regional markets but at the same time offer an image that appeals internationally.

“We believe that investors are looking for bigger companies with a larger fleet, growth strategies and simply because bigger companies have better set up in terms of corporate governance,” Skorge told delegates at the Capital Link China Shipping Forum held in Shanghai on Tuesday.

“When the (IPO) market reopens, the potential issues are which exchanges can be the best fit for each of the company’s requirements,” he said.

Erik Stromso, head and managing partner at Pareto Securities Asia, concurred that it would make more sense for a lot of Asian companies to use their local exchanges, unless the company has certain connections to Western markets.

Poor investor confidence and the overall market slowdown have led to little or no IPOs for shipping markets in the Asian bourses such as China, Hong Kong and Singapore. Shipping companies, however, will still be pushed to seek more funds from the capital markets, according to Arnold Wu, managing director and co-head of transportation sector at BNP Paribas.

Wu noted that apart from the Basel III regulation that banks are facing, there will come a time for Basel IV, resulting in more restricted access to banking funds and a greater need to rely on the capital markets.

“There will be investors looking into this [shipping] sector again even if the capital market is weak at the moment; the investors will come back,” Wu said.

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