Picking up Distresed Assets and Private Equity

John Kennedy has a quote: “When written in Chinese, the word “crisis” is composed of two characters-one represents danger, and the other represents opportunity.” But even as the shipping markets in general remain in doldrums, there have been surprisingly few mergers and acquisitions in the market, contrary to what one might expect. The lack of liquidity and funding from the banks could be a reason. Or could it also be that market watchers are still holding on to the view that asset prices have yet to hit rock bottom? So whether it is this fear of catching a fallen knife or the lack of financing and quality investment opportunities, seasoned shipping investors and private equity firms remain largely on the sidelines. There were few public distressed situations this year and this could well suggest that banks are working very hard with their clients to avoid foreclosures, rather than accepting haircuts on assets.

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