Maritime Equity presenting draft portfolio
5.3.2008 | Hamburg
Maritim Equity I draft portfolio
International interest in co-financing ships with Maritim Equity
The subprime crisis has long since spread beyond the real estate sector, with banks now more restrictive in their lending practices regardless of the sector. German ship companies also face calls for higher equity ratios, increased borrowing costs and greater collateral. Yet, demand for fresh cash is unabated as shipping is continuing to boom. Funder initiator Maritim Equity is now offering ship companies a new source of finance. This new alternative is meeting with strong interest on the part of ship companies, with demand already substantially exceeding the issue volume of EUR 100 million. This is also good for subscribers as the fund offers attractive target investments and, with an equity ratio of around 90 percent, one of the highest investment quotas in the market.
Hamburg-based fund initiator Maritim Equity Beteiligungsgesellschaft mbH & Co. KG (Maritim Equity) has today released details of the target investments for Maritim Equity I for the first time. This fund is based on a new type of model allowing subscribers to invest in the purchase and operation of merchant navy vessels such as tankers, bulkers and container ships via a conventional limited partnership directly and in conjunction with ship companies.
All told, ship companies’ interest in co-financing is already well and truly exceeding the planned equity volume. The fund issuer is already engaged in specific negotiations for buying ships and the terms and conditions of finance for around 50 percent of the planned fund volume of EUR 100 million.
The model underlying the fund provides for the shipping experts at Maritim Equity to assemble a broadly diversified portfolio of ten ships. In this way, Maritim Equity I has the option after the end of the subscription phase to immediately invest in six container ships with capacities of 1,300 to 5,000 containers, two bulkers and two tankers.
International interest in innovative finance model
The strong interest on the part of ship companies in this new way of co-financing ships has surprised even the experts at Maritim Equity. Since we launched Maritim Equity, we have been inundated with inquiries by ship companies and have examined around 30 proposals in greater detail in the first four months,” reports Dr. Werner Großekämper, managing director of Maritim Equity. “We are receiving inquiries not only from within Germany but from around the world. This shows us that we have launched our new model at exactly the right time. There is enormous international demand for capital.”
Investors subscribing to the first Maritim Equity fund are particularly benefiting from this strong demand. “We have a large selection of attractive ships which are being offered to us for co-financing. On top of this, however, the current environment has given us an excellent position when it comes to negotiating the specific terms and conditions,” says Großekämper. Accordingly, the fund management is able to insist that the subscriber capital in Maritim Equity be given a higher ranking in payouts. “This is one of the core elements of our models and heightens the security for our subscribers,” explains Großekämper.
Subprime crisis only one of the reasons for the strong demand
One of the reasons for the strong interest by ship companies is the subprime crisis, which has long since spread beyond the real estate sector. Banks are now more restrictive in their lending practices regardless of the sector. Shipping companies also face higher equity ratios, increased borrowing costs and calls for greater collateral. Yet, demand for fresh cash is unabated as shipping is continuing to boom. At the moment, German ship companies have new orders worth around USD 100 billions on their books.
“Up until last summer, the financing banks granted loans very generously and also on inexpensive terms. However, this has since changed,” explains Großekämper. Indeed, the world’s largest ship financer, HSH Nordbank, even had to temporarily spending new lending completely in the fourth quarter of 2007. Although the bank has stated that it is now lending again, the planned lending volume for 2008 will come to only around USD 12 billion for 2008, i.e. around 40 percent down on the 2007 volume of USD 20 billion, if the situation in the funding market does not return to normal.
Direct investments: Greater opportunities for returns for providers of equity
Co-financing ships with Maritim Equity is very appealing to ship companies. This is because Maritim Equity provides 25 to 75 percent of the necessary capital, thus strengthening ship companies’ equity structure on a sustained basis. This gives ship companies greater financial flexibility and reduces their dependence on banks. At the same time, they are able to extend their own fleets on a solid basis.
Maritim Equity subscribers and the ship company as the providers of equity share the entrepreneurial opportunities arising from appreciation in the ship’s value and, hence, the unrealized reserves. “Many successful ship companies prefer to act as entrepreneurs and not merely as service providers for their ships,” confirms Großekämper.
At around 90 percent one of the highest investment quotas in the market
Maritim Equity I offers subscribers a new investment model. On top of this, however, it also boasts what is currently one of the lowest soft cost ratios of any ship fund. “Roughly 90 percent of the equity is invested with Maritim Equity. Including the premium of five percent, this means that the soft costs equal 10 percent of the equity. By comparison, conventional ship funds budget soft costs of between 18 and 23 percent including the premium,” explains Großekämper.
The subscription period for Maritim Equity continues until September 30, 2008. The minimum subscription amount is EUR 20,000 plus a premium of 5 percent. The fund has a planned life of 12 to 15 years. In addition to capital paybacks, a post-tax return of 6 - 8 percent p.a. is budgeted.
Maritim Equity I im Überblick
| Funds volume | EUR 100.000.000 |
| Debt capital (current account loan) | EUR 5.000.000 Euro as a liquidity reserve |
| Investment ratio relative to equity | 89,3 % |
| Minimum subscription amount | EUR 20.000 |
| Expected average net return | 6 - 8 % p.a. |
| Planned term | 12 - 15 years |
| Payment schedule and installments | 50% upon subscription plus 5% premium 50% on October 31, 2008 |
| Interest on equity 2008 8 | 5% on the first installment until the end of 2008 in the of subscription on or before June 30, 2008 |
About Maritim Equity
Maritim Equity is a fund issuer which was established in 2007 by Salomon & Partner for innovative investment products for the shipping sector. The shareholders and managing directors of the Hamburg-based company have more than 30 years of experience in shipping and in engineering lucrative ship funds.
www.maritim-equity.com
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Press information: Falk Diestel
redRobin. Strategic Public Relations GmbH,
Altonaer Poststraße 13a,
22767 Hamburg
Tel: +49 (0)40-692 123-25,
Fax: +49 (0)40-692 123-11,
E-Mail: diestel@red-robin.de