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Tuesday, August 04, 2009

Shipping investment funds a new trend among ship owners

Tuesday, 04 August 2009

Just a couple of months after we had reported that a number of institutional investors and investment companies had been actively scouting the Piraeus shipping market for opportunities, market sources indicate that another shipping fund is on the verge of being set up.The private equity fund Financier Investment Group (FIG) is expected to be created by ship owners Spyros Lemos, aiming to accumulate funds of between $700 million and $1 billion. They will be directed towards the acquisition of second hand dry bulk carriers built from 2004 until today, targeting panamaxes in particular. According to market reports, the minimum fleet should comprise at least 5-7 modern vessels. Besides shipping, the fund is also expected to make investments in the areas of insurance and health. Spyros Lemos is coming from one of the most traditional shipping families of Hellas. His father, Panagos Lemos is the owner of LPL Shipping, which had been acting as agent in the Hellenic market, on behalf of leading shipping management company V Ships.
But, FIG isn’t the only fund seeking to take advantage of the dramatic fall in ship values during the previous months. It is estimated that more than $1.5 billion in funds is currently searching the Hellenic market opportunities, where the world’s leading maritime community is based. Morgan Stanley was the story of the days in Piraeus, with the emergence of the company’s intentions to set up an opportunity fund to take advantage of the global downturn in shipping by investing up to $400m in dry bulk and container ships. The bank is working with two Hellenic shipping organizations (either banks or even ship owners) to create the debt fund which will target distressed investments in shipping. The fund is aiming to invest in shipping debt that could be sold off for as much as a 60pc discount. The Morgan Stanley fund is expected to target investing in up to 40 of these ships, mainly through buying up debt.
Also, according to Hellenic Shipping News’ sources, a big and traditional ship broker is closely advising both Merill Lynch and US fund Alterna, on ship acquisitions. Similarly, Hellenic investors are also looking to set up a shipping fund, in cooperation with a banking group.
Cyprus-based SFS Group Public Co Ltd and Kuwait Finance House Labuan (KFHL) will also jointly establish a Shariah compliant shipping fund with a target fund size of US$150mil by year-end. SFS Group and KFHL, a wholly owned subsidiary of Kuwait Finance House (M) Bhd have signed a joint venture agreement to set-up the fund via a limited partnership in the Cayman Islands. The companies said in May that the fund would be managed by an equally-owned company acting as the general partner based there. The shipping fund’s objective will be to invest directly in shipping assets and primarily in vessels to be chartered out on a long-term basis to top league charterers. The term of the fund will be seven years from first closing with up to three additional one-year extensions. Another US investment group, JP Morgan Asset Management is launching a maritime strategy this year which will invest in the distressed shipping market. JP Morgan is currently in fund-raising mode for the strategy, seeking some $500 million to $750 million initially.

Nikos Roussanoglou, Hellenic Shipping News Worldwide