Monday, February 23, 2009
Monday, 23 February 2009
The lack of financing is the main reason behind the diminishing number of deals in the second hand market for ships, as evident by the low numbers of vessels changing hands. According to figures compiled by Allied & Shipbroking, from the beginning of the year Greek ship owners have invested a mere $266 million, when during the same period of the previous year they had put down a whopping $1.3 billion. Owners have bought only 13 ships through the second hand market, against 25 vessels bought one year ago. As one can notice, the double number of ships of last year required almost nine times more money, which is a further testament to the drop in values. While Greek owners are keener in dry bulk carriers, investing $217 million for them, against only $48 million for tankers, US buyers are opting for the opposite direction. From the beginning of 2009, they have invested $219 million for tankers and only $2.65 million for dry tonnage.
The second hand market at the moment presents solid investment opportunities, with values plunging as much as 50% on average in the dry bulk segment. The drop is even higher in older dry bulk tonnage reaching a massive 75 percent. But with the recent rebound of the freight market, with the BDI now exceeding 2000 points, even older vessels can achieve respectable earnings, thus rendering them a rather safe bet among investors. So far thought, it is mainly Chinese who are rather active in securing older tonnage, according to reports by shipbroker George Moundreas & Co.
The attractiveness in ship values is one of the reasons why a series of investment funds have been arising, looking to exploit these opportunities. According to market sources, a US-based mid-sized fund with Greek supporters from overseas actively looked in the Piraeus market during the previous week. The fund is looking to invest approximately $200 million to acquire assets from both the tanker and the dry bulk segments of the market.
Even banks are into investment funds lately. Germany’s DVB Bank, the specialist in transport finance, recently announced the formation of the Shipping and Intermodal Investment Management ("SIIM") team, in which DVB's fund manager teams for the shipping, intermodal and rail fund activities have been merged. Declaring that some transport assets in the maritime industry are trading below intrinsic value, the SIIM team launched the 'DVB Invest Opportunity Fund', an up to USD 250 million fund, focused on counter-cyclical and opportunity driven investments in the shipping and offshore industry. According to the bank’s website, shipping investment funds have been offered since 1999 by DVB (until April 2008 under the name 'NFC Shipping Funds'). To date, the aggregate investment volume undertaken by the shipping funds stands at approximately $3 billion involving over 200 ships. The first intermodal fund was set up in 2006 and to date the investment volume is over USD 800 million in maritime containers and other intermodal assets.