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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, 11 June 18
AUSTRALIAN COAL PRICES HIT 6-YEAR HIGH AS ASIA DEMAND SPIKES - REUTERS
Australian thermal coal prices have risen to their highest level since 2012 as hot weather across North Asia spurs buying ahead of the peak summer ...
Monday, 11 June 18
ANALYSING A NEW AGE OF AUTONOMOUS VESSELS - IMO
The International Maritime Organization answers the questions of Government Europa on how the next generation of autonomous vessels can be regulate ...
Friday, 08 June 18
AUSTRALIAN THERMAL COAL PRICES SURGE AS ASIA DEMAND HEATS UP - REUTERS
Australian thermal coal prices have hit their highest level since late 2016 as the market heats up on strong demand across North Asia and China in ...
Wednesday, 06 June 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
As observed last month the price of oil hit its highest level since November 2014 reaching $80 per barrel. Global oil demand growth for 2018 was sl ...
Tuesday, 05 June 18
SOUTH KOREA'S SULPHUR CAP ALTERS ASIAN COAL MARKET DYNAMICS: RUSSELL
South Korea’s imposition of a strict sulphur cap on its imported coal is likely to cause ripples across Asia’s markets for the pollutin ...
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- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- MS Steel International - UAE
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- White Energy Company Limited
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Australian Coal Association
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- The University of Queensland
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Planning Commission, India
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