Oslo: Chinese ship finance is set to become ever more prominent as the hole in capital for the industry looks to be plugged from the east, says a leading lawyer in today’s Maritime CEO profile.
Geir Sviggum was appointed to the newly established position of managing partner international at Norwegian firm Wikborg Rein a couple of years ago. Drawing on five years of experience from the company’s Shanghai office, Sviggum is responsible for ensuring the continued success of all international offices. He has just returned to Oslo, but clearly the time spent in China and that nation’s financial muscle have rubbed off on him.
International ship and offshore asset financing has, over the past decade, been dominated by the Norwegian banks DNB and Nordea, as well as other European banks such as HSH Nordbank and Commerzbank, he recounts.
“During and after the financial crisis we have seen a changing landscape,” he points out.
It was estimated last year, he observes, that the international shipping industry was short of $100bn in external financing; mostly due to shrinking shipping portfolios among the continental European banks.
“This has paved the ground for new players on the stage,” he says, adding: “In Asia, we have seen a trend that this gap is increasingly being filled by the major Chinese banks who are now aggressively entering the world of international ship and offshore asset financing. Four of the world’s 10 largest banks by market cap are now Chinese, and Norwegian and international ship and rig owners are key targets in their process of internationalisation.”
For Westerners, Chinese financing is, to a large extent, “a black box”, Sviggum says, and knowledge of how to enter into deals with these banks and – even more so – how to collaborate with these financiers in times of difficulty, when the need for renegotiation is pressing, is very limited.
Wikborg Rein is an international law firm with Norwegian origins. In addition to its Norwegian offices in Oslo and Bergen, the firm has established offices in London, Singapore, Shanghai and Kobe and is continuing to expand the size of its international operations.
Delving further into financing trends, Sviggum discusses the increasing prominence of the Norwegian bond market.
Due to outside pressure and further regulatory requirements, the main shipping, offshore, and energy banks have taken a more cautious approach to financing in recent years, Sviggum explains. This has led to alternative mechanisms for financing becoming increasingly popular, such as bond loans.
The Norwegian bond market has shown a particular willingness to invest in the offshore industry, something which is reflected in an increase of legal advice in these deals, Sviggum notes. A particular trend seen in 2013 was the involvement of South American companies in the Norwegian bond markets, with Brazilian and Mexican offshore businesses accessing this method of financing.
Plenty of work then for the Norwegian firm with its international outlook. [10/02/14]