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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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Wednesday, 25 July 18
TANKER MARKET INSIGHT - DIMITRIS KOURTESIS
We are now into the second half of 2018, which so far has not been a fruitful year for tankers. With 2020 quickly approaching we need to consider t ...
Tuesday, 24 July 18
TANKER MARKET : IN TERMS OF TRADE, THE STEPS THAT WERE SLOWLY BEING TAKEN BY OPEC AND RUSSIA - GEORGE LAZARIDIS
Despite the fact that the tanker market still seems to be in the midst of a perfect storm, there are still strong indicators that better sailing da ...
Thursday, 19 July 18
VINACOMIN PRODUCES OVER 20 MLN TONNES OF RAW COAL FROM YEAR'S START - VNA
The Vietnam National Coal and Mineral Industries Group (Vinacomin) has produced over 20 million tonnes of raw coal and 19.3 million of clean coal f ...
Wednesday, 18 July 18
INDONESIA TO AUCTION 16 MINING SITES - JP
Indonesia will soon auction 16 mining sites as no proposal submissions have been submitted by state-owned enterprises (BUMN) and regional administr ...
Wednesday, 18 July 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
The new regulations for Chinese flag restricting import of Tier I ships have dominated market sentiment during the past days as buyers have been tr ...
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- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Planning Commission, India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
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