Norway could overtake Wall Street as capital-raising centre for shipping
PROCEEDS raised by US-listed shipping companies from equity and debt offerings are at record low levels in the year to date, with capital-raising activity so low in New York that Norway could overtake the US in terms of gross shipping proceeds by year-end
PROCEEDS raised by US-listed shipping companies from equity and debt offerings are at record low levels in the year to date, with capital-raising activity so low in New York that Norway could overtake the US in terms of gross shipping proceeds by year-end.
According to an analysis of public securities filings by FreightWaves, US-listed ship owners have collectively raised US$598.9 million in gross proceeds since the start of this year, putting 2019 on track to be the worst year ever for shipping proceeds since the industry came to Wall Street in the early 2000s, reported American Shipper.
US-listed companies raised $3.5 billion in proceeds in the first nine months of 2018, six times more than this year's take. To put this into perspective, 2018 was a bad year for ocean shipping capital-raising. Full-year proceeds for US-listed owners in 2018 totalled $3.98 billion, half the $8.17 billion raised in 2014.
The situation is particularly abysmal for sales of common equity. In 2019, there were just two offerings totalling $24.3 million, done by micro-cap Greek-sponsored companies: bulker owner Seanergy, which grossed $14.3 million in May, and product-tanker owner Top Ships, which is closing a $10 million deal now. In both cases, equity was sold with warrants attached and the offerings have been highly damaging to the stock price.
By this time last year, US-listed ship owners had raised $348.2 million from common-equity sales, 14 times the current year-to-date total. US-listed shipping companies raised $648.2 million from common-equity sales in full-year 2018, their worst full-year performance since the sector started to go public in the early 2000s.
There have been no shipping initial public offerings (IPOs) in the US market since June 2015, although companies continue to list in America via so-called 'direct listings' in which no money is raised from equity sales.
The majority of Wall Street shipping deals in 2019 - as was the case last year - have been sales of debt securities or hybrid securities, not equity.
Oslo, Norway has traditionally been weaker than Manhattan in terms of shipping capital-market finance, but it's catching up fast.
There have been the same number of shipping capital-market deals in Oslo year to date as in New York, although aggregate proceeds are still lower because Norwegian deals are done in smaller chunks.
Capital-markets proceeds of Oslo-listed or Norwegian-over-the-counter-traded companies year-to-date (excluding ferry, offshore and investment-company deals) total $398 million. If you switch the Norwegian bonds of US-listed Ship Finance International onto the Norwegian side of the ledger, Norway is within just $40 million - or a deal or two - of overtaking the US market by year-end.
During an interview with FreightWaves in August, Epic Gas chief executive officer Charles Maltby commented on capital-market dynamics in general and the specific appeal of the Oslo market.
'The capital markets are correctly punishing shipping in a brutal way and you can't blame them because it's difficult to find a beacon of profitability in the entire shipping sector,' he said. 'There was hyper-investment in the sector as a whole in 2012-14, and it'll probably take 10 years to unwind.'
Regarding the appeal of Oslo, he explained: 'We've found investors here to be very knowledgeable on the shipping space and there's an underlying interest in shipping in Norway and a legacy of banks, lawyers and investment advisors who are familiar with shipping.'