Last week’s 2015 Marine Money Week in New York was again dominated by international shipping topics, but there were discussions on the roles for private equity (PE) in the workboat sector.
Key questions are whether PE has been burned by the failure of the dry bulk market to rally (and, by inference, will pack up and never return), and the role for commercial lending institutions going forward. Tighter controls, in the form of increased capital requirements, have caused traditional shipping banks, particularly in European countries, to pull back from shipping. PE firms such as Oaktree Capital, Monarch Capital and others like Blackstone Group, Apollo and Carlyle, have entered the breach, at least partially meeting a gap in funding. In attendance at the conference was management from Intermarine (which has been backed by PE investor New Mountain Capital).
According to Jeff Pribor, global head of Maritime Investment Banking at Jefferies LLC who spoke at a post-conference breakfast hosted by New York Maritime (NYMAR), PE is not monolithic. He said that there are different types of investors, with different styles and objectives. He described a universe of 40 to 50 large firms that hoped to invest at the bottom of the dry bulk cycle, but the hoped-for rally failed to occur. He explained that PE firms with bad experiences in the dry bulk sector may not invest again in shipping anytime soon, but that a different set of firms may invest in shipping, as all manner of non-bank capital continues to fund the industry.
Pribor added that traditional banks might be tempted to re-enter the ship finance arena, but he expressed the opinion that structural changes within the banking industry will put constraints on the ability of traditional banks to re-enter ship finance in a big way.
