V.Ships broadens portfolio of financial services covering every need
V.Ships, already a leader in ship management for prominent shipping companies, has established a series of other services supporting its clients. Formed in 1984, the group has grown to become the world’s largest supplier of ship management and a
broad range of other marine outsourcing services primarily under the V.Ships brand.
This portfolio was extended in recent years to include financial services provided by V.Investments. Currently, V.Holdings is leveraging its expertise in crew management to supply the offshore industry and logistics sector via the newly established V.People. The Group employs 22,500 people in 70 offices around the world. It also manages over 900 vessels with a total deadweight of 44.7 million tons.
Following is an interview with Mr. Mauro Renaldi, Managing Director of V.Ships Greece.
Regarding, in particular, the fields of asset management and financing, could you provide us with a complete outline of the services and products offered?
V.Financial, which is a sister company to V.Ships, is the shipping investment, corporate financing and asset management division of the V.Group. Integrating the services provided by the group and together with our investment partners, we are able to offer time-charter and bareboat leases for virtually any shipping or marine/offshore asset, mitigating not only our clients’ asset value risk, but also their operating risks.
We also provide full marine-asset management packages facilitating the aspirations of financial investors in the acquisition and operation of physical marine assets.Β In poorer markets, this service has typically been performed on behalf of our banking clients ““ mainly for distressed/defaulted assets.
We are also in a perfect position to support our shipowning clients with their aspirations in the public markets. The NYSE and Nasdaq, London’s main market and the AIM, the Oslo Bourse and Singapore’s MFI are all exciting and liquid markets for owners of marine assets with growth ambition ““ something which needs little introduction for the Greek shipping community!
Which types of products are available in the areas of financing? In which part of the financing process does V Ships take part?
Most recently, we moved into the US, partnering with Merrill Lynch as their shipping investment partners to launch a series of asset-backed investment funds called V.Funds, initially offering long term financial leases to industrial end users ““ a product which complements well the more equity driven structures such as our KG and KS models. The scope of our new alliance with Merrill Lynch extends beyond the structured leasing model to also cover corporate finance deals and M&A transactions in the shipping sector, an area where the group has already been involved for some years and where we believe that we can add significant value for our clients. This is an exciting time for us in this respect.
KG Financing: KGAL is Europe’s leading structured asset leasing company. Already partnered with Lufthansa to provide aviation leases, when they decided to enter the shipping markets in 2004, V.Ships was the obvious partner. Under the umbrella of V.Financial, AL Ships has become an award winning provider of operating leases to the global shipping industry. AL Ships is a 50/50 joint-venture with transactions being co-underwritten between KGAL and V.Financial. These are public placements, passing to investors the benefits of the German tonnage tax system ““ the investors are mainly German, middle-class professionals investing small equity participations. Although recently we expanded into bareboat leasing, operational leases have traditionally been the prime offering with the fleet being managed from V.Ships’ Hamburg office.V.Financial and V.Ships source the deal then provide full technical and commercial management while KGAL, our partners, place the investment.
KS Financing: Scandinavia and in particular the Nordic countries have always played a significant role in the shipping industry. Traditionally focusing on their own maritime clusters, it was difficult for many outsiders to penetrate. V.Financial has strong roots in this area, with one of our main deal-bases located in Copenhagen, a vital maritime hub for Scandinavia and the Baltic. In 2005, we enhanced and grew our presence beyond our close relationships with the Nordic shipping banks and partnered with leading Danish project financier, CS&Partners to create Shipping Invest K/S. The flexibility and liquidity in the Nordic KS markets is unseen anywhere else in the world. In Denmark, these are 10-man investor schemes which tend to involve the acquisition and time-charter of vessels between, say, USD 20 ““ 50 Mio.
Who is eligible for these services? Can medium-sized companies with fleets of 10-15 ships benefit from them, or are they solely targeted to big customers?
Anyone, anywhere, any size ““ and in fact, we are very interested to work with smaller to midsized companies where often our services can be far better utilized. Whereas the KG market is focused on blue-chip credits, the KS market is far more flexible in this respect. The latest offering, V.Funds, has taken a particular approach to this by utilizing our abilities to evaluate shipping credits and asset management capabilities. In essence, every deal has an optimal structure so we take every opportunity on a case-by-case basis.
We focus on the long-term market risk of a project, determined by how a vessel’s price compares with historical average, earning potentials, high and low market indicators as well as forecasted market developments. The global fragmented nature of the shipping industry is changing and no longer is so different from most other industries; corporate track record, management, strategy and capital structure are evaluated to estimate the risk/return, value and liquidity potential of an investment.
While many of the deals we have done have been with AA grade lessees, we have also provided funding for smaller-cap entities who would perhaps be labelled as sub-investment grade by many of the shipping lenders. We always say that the most important criteria is that there is a story ““ first and foremost we seek value investments.
Which is the competitive advantage of V Ships in this specific field?
V.Ships’ broad portfolio and expertise means that V.Financial can provide leasing arrangements and asset management capabilities for nearly any ship type or offshore unit. The ability to provide full operational leases (time-charters) on a sale and charter-back basis from in-house and to do so at the most competitive rates is something which has certainly not gone unnoticed with many of our end-user clients who have continued to repeat business with us time and time again ““ these include some of the top names in the industry.
We build our long-term relationships with institutional investors where our in-depth research and due diligence, risk management, operational excellence and specialized reporting capabilities are emphasized. We have developed a distinct competitive advantage by partnering with leading financial institutions around the world to facilitate our joint-investments in attractive opportunities. For financial institutions, it is our unparalleled full-scope offering. In fact, we are the only full marine services provider with such an offering. It’s a group which has been pioneering in ship management and we would like to think of ourselves as pioneers in vessel ownership structuring and financing too.
Our real strength derives from the interaction of the individual specialists within the team, permitting effective and creative solutions to the varying challenges encountered by ourΒ investors and corporate clients alike; Legal, Financial, Commercial, Technical and Operational excellence.
How is your billing determined based on each service? What types of commission are put into effect in each case?
The key to a competitive marine financier is a low cost of funding and in the present market just one percent can make or break a deal. We do not take a commission ““ we make our money from fund management and pre-syndication underwriting fees.
Could you please provide us with a case study in terms of financing?
While AL Ships has tended to focus on larger transactions with blue-chip lessees, the KS market is geared more towards smaller deals where flexibility is required. A typical deal for AL Ships would involve modern tonnage, preferably an en-bloc deal and a minimum five year time-charter to a strong credit. The last deal we did in AL Ships was the sale and bareboat charter back of four 1990’s built panamax bulk carriers to a NASDAQ listed company. Before that, in AL Ships, we purchased a 2000’s built Aframax tanker and time-chartered it to a third party for five years. A KS deal could be a slightly older ship on time-charter to a mid-sized company ““ for example, we purchased a 1990’s built 1,100 teu containership and time-chartered her to a third-party. The third leasing option, V.Funds, is extremely flexible and looks at opportunity on a case-by-case basis.
Nikos Roussanoglou, Hellenic Shipping News Worldwide