Shipping’s consolidation conundrum continues
Time：2014-09-26
Browse：58
Over the course of two days at Marine Money Asia the issue of consolidation came up time and again but with little consensus on what lies ahead.
“I think there will more consolidation. I am surprised how little consolidation there has been,” said Nigel Anton, global head shipping finance, Standard Chartered Bank.
Jachim Skorge, managing director and regional head DNB Markets believed there would be more merger and acquisition (M&A) activity in shipping, although this would not necessarily lead to a more consolidated market.
“I think the main driver for M&A is what we are seeing in the capital markets. In the past there has been a lot of talk about M&A in shipping but relatively little action,”
Skorge saw liquidity as the key factor for investors with companies needing larger market caps in the range of $300m to $500m. This scale or larger allows for improved access to funds and equity financing.
Certainly Star Bulk Carriers chairman Spyros Capralos agreed with this view saying that with its mergers with Oceanbulk and Excel Maritime increasing its market cap to around $1bn it had become more attractive to investors.
He said that at least in terms of Greek owners one of the factors that had blocked consolidation was mainly individual egos. “Things are changing, private equity gives opportunities for people to grow fast and many people are thinking about consolidation.”
Geir Sjurseth managing director, head of offshore finance for DVB Bank, was negative on the prospects for consolidation. “I see big difficulties.” He noted the last seven years had been the best time to get companies together but nothing had really happened. Sjurseth added that new entrants such as Scorpio had engaged in the opposite of consolidation going a huge newbuilding buying spree.
Another negative view on consolidation came from Hew Crooks, partner and cfo and Ridgebury Tankers, who said: “I doubt you are going to see a significantly more consolidated industry in five years time.”
Taking a contrary view though was Pioneer Marine ceo Pankaj Khanna who said that as a small handysize owner they operated in one of the most fragmented sectors of shipping where there were 3,000 vessels and 1,000 owners. “In five years time we will be much more consolidated that we are today. It’s very difficult to survive as a two, four six ship owner.”