AMSTERDAM: Global shipping grapples with its worst downturn in 30 years, private equity firms are unwinding massive bets made on the sector in a move set to accelerate a restructuring of the shipping industry.
Private equity invested tens of billions in global shipping after the 2008 financial crisis, but weaker Chinese demand and an oversupply of ships has driven down freight rates and caused firms to idle vessels and in some cases file for bankruptcy.
At least five private-equity backed shipping firms are seeking share listings, though it’s unclear whether they will be able to price them to make a profit.
Industry sources also expect mergers and acquisitions to drive more consolidation in one of the world’s most fragmented industries. According to shipping services firm Clarkson, 70 percent of the sector’s thousands of firms own fewer than 51 vessels.
“People who invested in dry bulk are likely losing their shirts. Those that invested in container ships probably feel disappointed,” said Jim Furnivall, managing partner of Alterna Capital Partners.
The New York-based private equity firm had generated “great but not spectacular” gains in its investments in clean tankers, vessels that carry refined products, he said.
Private equity invested $32 billion in shipping from January 2012 to January 2014, maritime fund management firm Tufton Oceanic estimates. This is equivalent to 22 percent of the total value of the world merchant fleet, including ships on order.
