New Shore Invest, a Hamburg-based startup, is looking to revamp the old German KG financing model through a new digital ship finance platform that offers equity-based limited partnership shares to retail investors after securing seed capital from NorthCape Capital in Oslo.
Talking about the rational behind setting up New Shore Invest, Hanno Tamminga (pictured left), a managing partner of the firm, says he saw an opportunity for a new offering on the back of so many major traditional ship financing banks withdrawing from the market and the availability of debt has kept getting tighter, even though alternative lenders, such as leasing providers have entered the market.
“German shipowners are lacking equity due to the cessation of the KG model. It was clear to us that an equity-based crowd investing platform in the shipping industry had to be only a matter of time,” Tamminga says.
The startup solves two major problems, Tamminga claims. First, from the shipowner’s point of view, the lack of equity and second, it provides access for retail investors to a formerly exclusive and in certain segments promising asset class again.
The German KG (limited partnership) funding system, a major financing model that helped Germany quickly develop its merchant fleet to one of the largest in the world, collapsed in the past decade resulting in the country’s fleet shrinking by more than one third.
The principle of the New Shore Invest platform is the same as the old KG model. New Shore facilitates and structures limited partnership shares of single ship companies. What is new with New Shore is that for every share investors get a token, that is being generated on ethereum blockchain and held in the investor’s wallet. The token can only be acquired online and can also be traded and transferred in a secondary market.
According to Tamminga, the requirements for non-recourse finance is nowadays strict and leverage is mostly capped at 65%.
“This is where New Shore Invest comes in to fill the gap by facilitating equity-based and tradable security tokens with a minimum subscription amount of only EUR1,000, that opens a mass market,” says Tamminga, adding that the first promising niche segment the firm has identified is the European short sea sector.
Tamminga is a strong believer of digital platforms to become a major financing source for the shipping industry.
“The digital trend is set and irreversible. The digital product is easy, flexible and cost efficient to structure, technology allows to sell and distribute the product to a mass market and to administrate a large amount of investors. The investor experiences a quick and effortless signing process that can be done on the screen, paperless and just within a few minutes. The information about projects is available to everyone, as is the tracking of the investment through the online portal,” Tamminga explains.
New Shore Invest plans to structure and arrange about three additional projects within 2020 after the launch of its first project in the first quarter.