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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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Friday, 03 August 18
HBA HAS RISEN 28.41 PER CENT IN A YEAR TO BE AT THEIR HIGHEST LEVELS SINCE JANUARY 2012
COALspot.com: The benchmark price of Indonesian thermal coal has risen 28.41 per cent in a year to be at their highest levels since January 2012.&n ...
Thursday, 02 August 18
INDO / CHINA COAL RV'S IS PAYING AROUND USD 11,000 TO SUPRAS BSS DELIVERY SINGAPORE - FEARNLEYS
Capesize
The counter seasonally strong market during the summer months bodes well for the remainder of the year.
According ...
Wednesday, 01 August 18
JOKOWI CANCELS PLAN TO REVOKE COAL DMO - JP
President Joko "Jokowi" Widodo on Tuesday has canceled the government’s plan to revoke the domestic market obligation (DMO) for coa ...
Wednesday, 01 August 18
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
The dry bulk market activity over the past four weeks has remained stable when compared to the previous months. There are concerns with regards to ...
Tuesday, 31 July 18
INDONESIA UNLIKELY TO CHANGE COAL SUPPLY, PRICING RULES UNTIL 2019 - REUTERS
Indonesia is unlikely to change its rules on domestic coal supply and pricing until 2019, Coordinating Maritime Minister Luhut Pandjaitan said on M ...
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- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Planning Commission, India
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
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