Who’s the world’s largest shipowner? That was the question posed to 100 people by Professor Stavros Tsolakis at the International Shipowning & Shipmanagement Summit, part of London International Shipping Week. A chorus of big names – Cosco, MOL, Maersk, NYK, Oaktree – were all dismissed by the maritime economics specialist from Singapore Management University. The answer? The Korea Development Bank and China’s ICBC Leasing. This was the start of an hour’s session centering on private equity at the London conference. Tsokalis also pointed out that among the world’s largest shipbuilders is the Korea Eximbank.
Tsolakis said today’s financial situation for shipowners was similar to the 1980s. “If you are a Greek owner you compete with states,” he said, explaining that many countries are pumping huge sums of money into loss making entities. “Nations are competing with shipowners. Shipowners are competing with state-backed companies,” he said, suggesting that owners had to streamline operations to compete or even survive.
On private equity, Tsokalis said that after chasing the biggest names in shipowning for the past few years, private equity was now happy to do deals with smaller owners.
When shipping markets stabilise and liquidity returns to the banks, then private equity’s dalliance with shipping will diminish, Tsokalis predicted.
Clive Richardson, president and ceo of V.Group, the world’s only private equity backed shipmanager, made the case for private equity, even suggesting that had private equity been around more pre-2008 it might have reined in some of the excesses seen in the shipping market in the first decade of the 21st century.
“I think private equity has had a beneficial impact on shipping since 2008,” Richardson said, explaining that it had put a greater focus on returns and risk management.
He noted that private equity has pumped $25bn into shipping since 2008, and had make a “much healthier” split between equity and debt in in the industry.
Richardson said private equity could not be blamed for overcapacity in shipping, citing Marine Money figures that show private equity accounted for just 10% of deals done last year. “Private equity is not the biblical swarm some say,” he said.
As the only shipmanager to be backed by private equity, V.Group has remained ahead of its rivals, Richardson said, suggesting it had more “financial firepower” than any of its rivals, and that its leading position had forced others to consolidate, a reference to last month’s Splash exclusive on the merger of Anglo-Eastern and Univan, two large Hong Kong managers.