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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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Monday, 08 October 18
KOMIPO INVITES BIDS FOR 520,000 TONS OF COLOMBIAN ORIGIN OF 5,700 NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 520,000 MT of min. 5700 NAR coal of Colombian origin ...
Sunday, 07 October 18
SUPRAMAX: INDO-INDIA USUAL COAL RUNS WERE COVERED AT US$ 12K - FEARNLEYS
Capesize
Average daily earnings up close to 15 pct in 5 trading days, thus patience finally paying off for owners of the big ships - Chinese play ...
Sunday, 07 October 18
A CASE FOR 20/20 VISION? IMO'S LOW SULPHUR FUEL LIMIT UNDER MARPOL ANNEX VI WHICH COMES INTO FORCE ON 1ST JANUARY 2020
KNOWLEDGE TO ELEVATE
The implementation of the global 0.5% sulphur cap for bunker fuel under MARPOL Annex VI in just under 18 months’ ti ...
Friday, 05 October 18
COAL PRODUCTION REACHES 64% OF 2018 TARGET : THE JAKARTA POST
National coal production up to August has already reached 311 million tons, or 64 percent of this year's total target of 485 million tons, acco ...
Wednesday, 03 October 18
VALUE OF AUSTRALIAN COAL EXPORTS TIPPED TO DECLINE SHARPLY OVER NEXT 18 MONTHS - THE GUARDIAN
Thermal coal prices forecast to drop 25% and metallurgical coal prices 23% as value of iron ore exports also falls
The value of Aust ...
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- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Wilmar Investment Holdings
- The University of Queensland
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
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