London calling. London calling.

…. more education about shipping is key to attract investor appetite in London.

Marine Money returned to London after a long absence to host a wonderful 1st annual conference on 21st January 2010.  This was the first of 14 Marine Money conferences for 2010 and we got off to a cracking start.  Over 180 delegates and speakers attended with about one third coming from overseas.
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Investing and Investment Banking

The market is depressed. The people are not.
The debt markets exist. But you are looking at a lot less for a short term costing a lot more. A lot of the banks will be properly back into the game by 2010. It will help to have companies based in ship finance exporting countries.

The capital markets exist. The bond market is open at very reasonable rates. The equity markets are open for existing issuers but valuations are poor.

We may have a rebound this year thanks to stimulus plans and fiscal loosening, but the underlying damage is done. Banks will eventually HAVE to account for their losses. The write-downs have to come from somewhere and government debt is hardly the answer. Unless they wait years with the balance sheets impaired.
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Old Faces, New Places

Nick Davies, formerly of Jefferies, has accepted a position working for Michel Bourgery at DVB Bank in its capital markets business.

Dahlman Rose announced the appointment of Elliot Etheredge as Managing Director and head of the firm’s Marine Transportation Investment Banking group. Previously, Mr. Etheredge was at JPMorgan.

Secondary Opportunity

The German Ship Finance Forum followed last years’ pattern of commencing with a half-day seminar. This year’s topic was focused on opportunities in secondary markets. Chairman Michel Bourgery of DVB started things off with a brief overview of the markets. Based upon his successful prognostications in the past, we listened carefully as he suggested that listed companies would be taken private. He bases this upon the fact that there is no re-cycling of equity and they are locked-in loss making position. Moreover, limited visibility and overall pessimism are also factors. For those who have no fear, he suggested taking a position in the tanker market was too early as the one-year t/c rate is greater than the three year. For bulkers, the time to go shopping will be this summer.

Dr. Albrecht Gundermann of Salomon Invest took the audience through the secondary market in KG funds, which is relatively new. Historically, once you joined the party you could not leave it. Trading remains limited but there is a real market with real prices. Right now it is a buyers’ market. With a total market of EUR 30 billion, only 4% has been traded.

Pareto’s Peter Wallace next gave his insights into the IS/SPC (formerly the K/S) market. The size of the market is approximately $15 billion and is split evenly between shipping and offshore. The basic structure is a limited partnership which has both paid-in and uncalled capital. No longer tax-driven, this product is extremely flexible and can be designed in any form that makes economic sense to the participants. It is an ideal alternative when public equity is difficult or expensive or when the asset is trading below NAV. Investors like it because:
•    There is no management risk
•    You can pick the asset you want
•    The structure is transparent
•    A trigger clause allows the holders of 15-25% to cause a sale
•    There is a liquid secondary market
•    The price to put the project in the market is relatively cheap at 3-4% of the cost of capital
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CMA’s Irish Feis

CMA’s 2008 Shipping Conference got off to a brilliant start on St. Patrick’s Day. It was not only bigger, 2,000 attendees by latest count, but if possible was one of the best ever in terms of content. Understanding that everyone is Irish on St. Patrick’s Day, the organ­izers brought Ireland to the conference much to the chagrin of the local pubs, Tiernan’s and Tigin. Bob Kunkel of Seacoast Electronics was serving Guinness and Harps at the Seacoast booth and then brought in the pipes and drums from the Rockland County Emerald Society for entertainment.

It is grossly unfair to gloss over the program, which is dedicated to every part of shipping, but it would also be impossible to describe it all. So instead we will exhibit our prejudice and focus on the market sessions.

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“Fantastisch”

Thankfully we knew the 7th Annual German Ship Finance Forum was going to be busier than the empty Emirates flight that brought us here. In our effort to save our favorite direct flight, which is being cancelled next month, we were thinking of lending Emirates Mike McCleery, based upon his tireless and successful efforts, to do their sales promotion. Unfortunately our principals demanded he remain focused on his job.

But we could not imagine how big is big and how supportive of our efforts the German shipping community would be. We had an inkling on Monday as we drove to our first meeting. Mike’s Blackberry did not stop buzzing as registration after registration poured in. The final count is not in but we think we are approach­ing 500 delegates.

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