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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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Tuesday, 28 August 18
COURT CONCLUDES DELIVERY MADE IN ACCORDANCE WITH TERMS OF LOIS - INCE&CO
Glencore Agriculture BV v Navig8 Chemicals Pool Inc (Songa Winds) [2018] EWCA 1901 (Civ)
In this case, the Commercial Court fo ...
Tuesday, 28 August 18
SUPRAMAX: A COAL TRIP VIA INDONESIA PAID $13,500 ON A 56,000DWT TO WC INDIA - BALTIC BRIEFING
Capesize
The Singapore holiday mid-week disrupted trading and unsettled the market, with owners losing some resilience. The market took on a la ...
Tuesday, 28 August 18
SHIPPING MARKET UPDATE - GEORGE LAZARIDIS
As we edge close to the start of the Autumn Season, a period within the year that is usually characterized as the pivot point from the final quarte ...
Friday, 24 August 18
KOREAN RESTRICTIONS ON COAL SULPHUR IMPACTING HUNTER EXPORTS - THE HERALD
WARNINGS that Korean restrictions on sulphur levels in coal could hurt the Hunter industry appear to have been accurate, according to a report in t ...
Thursday, 23 August 18
RUSSIA'S MECHEL PRODUCED 9.69 MMT OF RUN-OF-MINE COAL IN 1H'2018
Mechel PAO, one of the leading Russian mining and metals companies, announces 1H2018 operational results.
Mechel PAO’s Chief E ...
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- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Thai Mozambique Logistica
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- White Energy Company Limited
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- PTC India Limited - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
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