The private equity powerhouse: Coming to a workboat near you

 

Readers have probably seen coverage of last month’s excellent Marine Money event held in New York. Top billing at Marine Money, if the conference is indeed the three-ring confab as some have described it as, belonged to energy trades, restructurings and private equity (PE).

Deep-sea getting all the attention 

Maybe because of the New York location, the PE talk focused on deep-sea shipping. But the workboat sector, especially the offshore facing parts, ought to be attractive to this form of “alternative capital.” PE likes restructurings — not widely applicable here, but it craves cyclical growth stories. Some (though not all) analysts feel that the commodity super cycle is alive and well, synonymous with a tide that further lifts all the boats. Consolidation, a different fuel for growth, also sells well to the PE crowd. Where fragmented markets see combinations, investors perk up. Besides bringing about economies of scale, investors start to get the scent (real or imagined) of pricing power.

Don’t ignore the workboat sector 

As businesses grow bigger and add more equipment, their value grows more than proportionately. Finance that is closely tied to asset values has served the workboat industry nicely. If the Marine Money conference was any guide, the alternative capital community has an enormous appetite for things that float — we’ve seen that in the blue water sector. Brownwater may be next. With equity markets at new heights (and interest rates now off their bottoms), maybe it’s time to invite the PE boys aboard.
 

 

About the author

Barry Parker

Barry Parker is a maritime consultant and writer. He covers shipping, energy and commodities, drawing on three decades of transactional and brokerage experience. His writing covers financing aspects of shipping and offshore, plus occasional technical or regulatory articles. His client work for ship owners, cargo interests and others includes project and market analysis, as well as commercial and operational guidance. He divides his time between midtown Manhattan and his home on Long Island Sound. He can be reached at bdp1@conconnect.com.

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