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Friday, 06 July 18
HOW FLEET SIZE, CORPORATE PROFILE AND STRATEGY ARE DECIDING FACTORS IN SELECTING AN APPROPRIATE FINANCING STRATEGY - PWC
 KNOWLEDGE TO ELEVATE
The challenges that shipping companies are facing when selecting an appropriate financing strategy during the current period of volatile global markets, renewed fears of protectionism and trade wars and the possibility of new technologies disrupting traditional industries, such as shipping, were some of the issues discussed with shipowners and shipping finance experts during the Shipping Industry Briefing organised recently by PwC at the Yacht Club of Greece, entitled ‘Navigating through new challenges in the global markets’.
While interest in accessing the US capital markets remains high for a number of private shipping companies, the ability to do so is becoming increasingly difficult for companies with smaller sized fleets. “During 2018, the US capital markets started out strong and have maintained momentum despite the volatility in the market. IPO themes continue to be strong – top line growth, differentiation, dependable cash flow and predictable revenue. More specifically, shipping companies that are interested in accessing the US markets will need to focus on segment, volume and differentiation”, says Santos Equitz, Director responsible for Capital Markets at PwC Greece.
To be on US capital markets radar requires the combination of a large market capitalisation and a strong prospect of recovery in the shipping markets, which may be a difficult combination to meet for private shipping companies. The limited access to the US markets and the decline in traditional bank lending, has led to alternative sources of finance to emerge to fill the gap. Leasing finance and Nordic Bonds have proven to be viable alternatives to fill the debt gap left from the traditional shipping banks reducing their exposure to the sector. Additionally, when it comes to raising equity, the Norwegian market has been effective, utilising the unregulated over-the-counter market (N-OTC) and Merkur Market for smaller companies or the regulated stock exchanges Oslo Axess and Oslo Stock Exchange for larger companies.
Socrates Leptos-Bourgi, Global Shipping & Ports Leader at PwC, opened the floor to a panel of experts to discuss these alternative sources of finance, mentioning that to go public in the US capital markets is a significant transformation for any company and more so for smaller, family owned companies. As discussed on the panel, some alternatives are available in the Norwegian markets, which have recently provided companies with the ability to raise finance through either equity issuance or high yield bonds. Andreas Aamodt Kilde, Partner at Pareto Securities, explained: “With the traditional shipping banks continuing to reduce their exposure to the global shipping industry, shipowners have to explore other alternatives to finance their vessels. Fortunately, the options are many and the opportunity in today’s market lies in taking advantage of the attractive non-bank financing solutions available. With every fleet, employment profile and capital structure being unique, my best advice to shipowners is to explore the alternatives out there in a structured and competitive process – financing is available, but one needs to know where to look”.
Although some interest had been shown by private equity funds in the past, this is not a trend that seems to continue and investors are looking for ways to exit. Nevertheless, this activity has positively influenced the interest in M&As, said Anthony Argyropoulos, Managing Director at Seaborne Capital. Although the scope for further M&As does not seem to be prevalent due to the lack of synergies in shipping, Argyropoulos believes we should expect a few more, possibly with public-private partnerships as the driving force behind them.
Chinese lease finance is also growing. With 12 out of 25 largest and active financing institutions coming from China, there’s a large appetite for investment, however the size and reputation of shipping companies are still major contributors to the final decision, explained Nick Daskalakis on the panel, Director at Smarine Advisors Limited. “Leasing finance has matured, providing flexibility on ship age, type, origin of built, employment, tenor, pre-delivery, day to day operational requirements, competitive terms and fast execution and drawdown timeframes. It is ideal for capital intensive projects, boosts liquidity and strategically diversifies lending risk for shipping groups, offering synergy opportunities with Chinese yards and charterers. Large holding structure groups with excellent reputation, transparency and strong cashflow are the prime candidates albeit competition is cascading interest towards mid-size groups nowadays”, he continues.
The role of China in global trade and the shipping industry was further analysed by Mr Feng Li, Commercial Counsellor of the Chinese Embassy in Greece. The Commercial Counsellor explained how China’s economic growth and shipping are linked and the wellbeing of the shipping sector is dependent on ensuring an open market and competitive free trade. He also added that the Cosco developments at Piraeus port are a commitment to develop the largest container port in Europe for the establishment of new channels to global trade. China and Greece have complementary strengths when it comes to shipbuilding, and the relationship between the two has been growing stronger over the past decade.
When it comes to the overall prospects of the main shipping markets, Henriette Brent-Petersen, Managing Director of Shipping and Offshore Research at DVB Bank SE, commented that “Despite the continuing ‘deleveraging’ process both in the Chinese and Korean shipbuilding industry, we do not expect the significant idle yard capacity to completely disappear in the short term”. “The data show a decrease in the nominal yard capacity, but do they reflect the truth? We are living in a world with new disruptive technologies that change the way we used to do business, and the same applies for the traditional shipbuilding industry. By leveraging on innovative automation technologies such as the use of robots, sensor systems and artificial intelligence, shipbuilders will be able to achieve a higher productivity and low-cost construction, high-quality products and on-time delivery. As a consequence, the conventional ship construction process could be transformed into what we call a ‘smart yard system”, she explains. The overall impact on shipping will likely be shorter cycles and hire rates to be volatile within a much narrower range.
Digitisation in the shipping sector is one of the most disruptive developments since the industrial revolution, and should not be ignored by any stakeholder – not just ship owners, but also ports and logistics service providers- which will ultimately lead to optimized operations in the whole maritime logistics chain. Referring to digital strategies in the industry, Burkhard D. Sommer, Deputy Head of the Maritime Competence Centre of PwC Germany, comments: “Digitisation is unavoidable; it will cause disruptive changes to the current business models. Digital strategies and implementation of technologies and processes shall be based on a holistic approach to improve the current way of working as well as ensure the success of any company in the future. Digitisation is importantly about using data from various sources to optimise operations. “It is not an option – in a quick changing world it is a necessity to be successful in the future but most of the players in the maritime industry still have a long way to go. It is time to move”, he said.
Shipping has been increasingly operating in a challenging economic environment, posing challenges as well as opportunities to operate and innovate for sustainable business operations. Although tradition has been a driving force in the industry’s success in the past, this is the time for ship owners to move away from traditional operating models and start thinking of alternative ways to grow their businesses.
Source: PwC
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Saturday, 20 October 18
PANAMAX: THE PACIFIC SAW A LARGE VOLUME OF FIXING, WITH INDONESIA AGAIN THE DRIVING FORCE - THE BALTIC BRIEFING
Capesize
A positive end to last week after a shaky start, with a Coaltrans taking participants out of the market early on and with rates slippi ...
Thursday, 18 October 18
SUPRAMAX: INDO/WC INDIA SUPRAS ARE FIXING AROUND MID $14000S P/D BASIS SPORE DELIVERY
Capesize
The volatile Cape market continues this week, especially in the Pacific says Fearnleys in its latest weekly report.
...
Thursday, 18 October 18
COAL SHORTAGE HITS POWER SECTOR AGAIN; HOW INDIA CAN GET ITS PRODUCTION RIGHT - ANIL SWARUP
By convincing states of the value proposition of increased production, the record production of Fy15 & Fy16 can be emulated.
The ...
Thursday, 18 October 18
CHINA POWER REFORM NEUTRAL ON GRIDS, PRESSURES IPP MARGINS - FITCH RATINGS
China's power sector reform has a broadly neutral impact on transmission grids although it will pressure the power producers' margins, says ...
Wednesday, 17 October 18
ESCROW SERVICE FOR BALTIC MEMBERS NOW LIVE
The Baltic Exchange’s Escrow Service for its members to hold deposits for ship sale transactions goes live today (15 October). The service is ...
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- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- The University of Queensland
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Australian Coal Association
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
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