London-listed Taylor Maritime Investments (TMI) has bought a 22.6% stake in Singapore-based Grindrod Shipping Holdings for $77.9m via a private, off-market acquisition from a wholly-owned subsidiary of Remgro Limited.
“The investment in Grindrod Shipping is consistent with Taylor Maritime Investments (TMI) strategy of seeking accretive growth opportunities to increase shareholder returns at a time when dry bulk market fundamentals remain strong with a historically low order book and a robust global demand outlook,” TMI stated in a release, going on to note how Grindrod’s fleet is similar to TMI’s existing portfolio with an average age of six years and above average energy efficiency compared with peers.
Grindrod, which was recently spun off from its South African logistics parent, owns 25 vessels which are mostly Japanese built, including 15 handysize vessels, nine supramax and ultramax vessels and one MR product tanker.
The acquisition is being funded via the sale of two Chinese-built handies.
Edward Buttery, CEO of Taylor Maritime, commented: “We believe the investment in Grindrod Shipping is an excellent opportunity where we know and respect the company which has a high-quality, young and complementary fleet. The acquisition will be internally funded by asset sales at premium valuations, cash on the balance sheet and prudent, short-term use of the company’s revolving credit facility.”
Analysts at investment bank Jefferies suggested TMI’s two Chinese vessels are likely deemed non-core given the company’s focus on geared Japanese-built vessels.
“These are young vessels built in 2016 and 2018, but will have a steeper depreciation curve than TMI’s preferred Japanese-built ships, and so have likely been sold at least at depreciated replacement cost. Importantly, it also highlights TMI’s willingness to crystallise value and recycle capital, even at this nascent stage of the fund’s life,” a note to clients from Jefferies stated. Jefferies maintained the Grindrod acquisition was a unique opportunity to acquire indirect exposure to vessels at relatively low implied valuations.
“In our view, this deal also does not indicate merger intentions, but as GRIN’s largest shareholder, and with historical relationships between the two families, there could be other ways to unlock value,” the bank argued.