Nearly one in five containerships owned by KG funds in Germany are insolvent according to data released by research firm Deutsche Fondsresearch. There are approximately 1,800 KG funds, controlling around 2,200 containerships at present.
BSI, an association for German closed-end funds, said its members had the equivalent of about $17.5bn invested in shipping assets last year.
“The number of emergency sales and/or insolvencies will rise,” Deutsche Fondsresearch manager Marcel Wodrich told the Wall Street Journal today. “Fresh money from banks or investors is not in sight.”
In his most recent column for Splash, ship finance veteran Dagfinn Lunde discussed the KG system and its current woes, explaining: “The guarantees given by the KG houses for the loans for expected equity to be paid in, had in reality no value as in some cases the total obligation/guarantees by the KG houses were up to 200 times the equity value.”