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Financing opportunities

Economic background

  • Banking Dislocation:
    • Following the 2008 financial crisis, commercial banks have directed their lending capacity to blue-chip, publicly-listed shipping companies due to size and regulatory restrictions, while others as part of their housekeeping exited shipping trying to focus on their local markets
    • The above situation implies an opportunity for our Fund to cover the capital needs for acquisitions or upcoming debt maturities of good quality shipowners
  • Loan portfolio opportunities
    • Some banks active in shipping finance, especially in Europe, due to the past financial and political crisis they have faced, are currently looking for capital relief solutions (in particular, by selling loan portfolios)
    • Potential to acquire loan assets at opportunistic price points

Top 40 bank’s lending to Shipping ($bn) vs. Total World Fleet (mDWT)

Source: Clarksons and Hellenic Shipping News Worldwide
Source: Clarksons and Hellenic Shipping News Worldwide
On an aggregate basis, over the period 2008-2021, traditional ship financing capacity has declined by c. 40%, whilst total world fleet in capacity terms has grown by c.80% over the same period.

Private Fund vs. Traditional Bank

Speed of Execution

The private fund can add significant value as it can conclude a transaction within 3-4 weeks, while a bank needs at least 2-3 months

Fixed Rate Option

Shipping Loans are typically SOFR-based. The private fund, without needing to price a loan with its cost of capital, is able to support the borrower’s debt servicing capacity, by providing an all-in cost of lending

Structuring Flexibility

The private fund can customize solutions much more easily than a traditional bank by offering a structure, amortization profile or collateral package that may be different from a standard arrangement

Equity Exit Option

While a typical ship financing bank relies on the ship as collateral, it is reluctant to own the ship for a variety of different reasons. The private fund, depending on its strategy and internal policy, may take ownership of the asset through a lease structure if it determines to be in its best interest. The option to enter a lease can be an advantage for the borrower compared to traditional bank finance
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