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Parakou: Headed for the NASDAQ

Hong Kong: Family run Parakou made a bold move early this December hiving off its Singapore tanker arm to go for a listing on the NASDAQ. Parakou is merging its tanker division with NASDAQ-listed Cambridge Capital Acquisition Corporation, which will take the shipping company public.

The newly merged company intends to acquire additional MR product tankers. Parakou’s tanker fleet currently consists of eight 51,000 dwt MR product tankers. Parakou has letters of intent or is in negotiations to acquire an additional 20 MR product tankers before the end of 2017.

Traditionally a low profile owner, CC Liu, who founded Parakou 29 years ago, has been enjoying the limelight brought about by this recent announcement.

Tightly knit Parakou has come a long way from its founding. Bought as a bankrupt entity in the middle of the 1980s shipping crisis, Parakou has since emerged as one of Hong Kong’s largest maritime players with a very significant bulk fleet to go alongside its smaller, but growing tanker division.

Liu is one of those characters who can genuinely lay claim to having shipping in the blood. He was born on a small boat on the Yangtze, attended a maritime college in Nanjing before starting out as a seaman with the then just founded Cosco Group back in 1964. Another employee at Cosco, Chik Sau Kam, would go on to become Liu’s wife. The pair immigrated to Hong Kong in 1971 where Liu started to work for Ocean Tramping before scraping enough together to take the plunge with Parakou, which developed from small, humble beginnings into a major player thanks in no small part to Liu’s ability to leverage off his mainland contacts, not least at Sinotrans.

Looking at supply and demand statistics and the overall state of the global economy today, Liu admits he expects a “tough market” to continue for a few more years. Nevertheless, this smiling shipping veteran and eternal optimist, now into his 70s, confides that unexpected opportunities always arise.

“No one can predict the future market precisely,” he says, adding: “A policy, a natural disaster or a new innovation may change the whole world.”

Parakou has been pursuing MR tankers for a while, a sector with solid long-term fundamentals, according to Liu.

“We expect that the global demand of product oils will keep on growing stably in the future, especially in the short term when the oil price has dropped significantly. Compared to the crude oil sector, there are much less market players in the MR sector due to the complexity on the ship operation and management,” Liu explains.

Another niche market that he is looking at are eco-designed handysize bulk carriers. While ultramaxes have been “very hot” in the market for the past couple of years with a vast swathe of newbuildings set to deliver soon, orders for handysizes have been very limited. Indeed, the average age of the handysize fleet is getting on. The availability of the eco design and the enforcement of some new regulations such as ballast water treatment systems and sulfur emissions will further accelerate demolition of the old tonnage, Liu reckons. “We will keep our eyes on this sector closely,” he says.

Operating in tricky markets is second nature to Liu. He has some simple rules he likes to follow. Having ordered more than 150 newbuilds over 29 years he has built up strong relationships with many leading yards in Asia. “This is an important key to our success, as it ensures that we can get better price, delivery slots and other contractual terms whenever we order newbuildings,” he explains.

Having never defaulted on repayments, Parakou has also established solid relationships with international and Chinese ship finance firms who like his conservative approach to shipping.

“We are a bit conservative,” Liu admits. “We select charterers very cautiously and prefer long term charters, in order to secure a stable income stream and strengthen our financial position.”

With shipping so fundamental to his daily life there’s little chance of Liu taking a step back just yet. However, he has nurtured his sons in the art of shipping. Elder son, John Lau now manages the bulker fleet, while the younger one, Por Liu, looks after Parakou’s tanker operations, with a proud father still very much at the helm.

Liu is the cover star of the latest issue of SinoShip magazine, the top title covering Chinese maritime. The full magazine can be accessed here. [12/12/14]

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