Evangelos Marinakis pulled off the contrarian move of the week by jumping into the platform supply vessel market with a landmark $320m newbuilding order.
But it is not his only contrarian strategy.
Another was adroitly pointed out by shipbroking legend Michael Tusiani as he interviewed the Greek entrepreneur in the highlight session of Marine Money Week in Manhattan.
Marinakis is making heavy bets in the LNG sector. And as Tusiani noted, while others in that gas trade have gone from public listings to take-private transactions in recent years, Marinakis is an exception.
He and his Capital Maritime team are retooling New York-listed Capital Product Partners into a pure-play on the LNG sector, filling a void that others have left.
GasLog, Hoegh and Teekay LNG are just some of the gas names to have disappeared from the public market board and become absorbed by private buyers in the past three years.
Struggles? I’ve had a few
Such companies tended to be tied to master limited partnership (MLP) structures that ultimately proved unsuitable for the cyclical shipping industry and lost favour with investors.
It’s worth noting that Capital Product itself has been an MLP since its public listing on the Nasdaq exchange in March 2007. As the name implies, its initial focus was on product tankers.
Like most MLPs, Capital Product has had struggles over the years.
When it announced it would explore a strategic shift into a gas pure-play last December, Capital Product owned 23 ships — 15 container vessels, seven LNG carriers and a bulker.
As TradeWinds reported this month, Capital Product has splashed out $756m on 10 gas ship newbuildings contracted by Marinakis’ private Capital Maritime & Trading as it furthers the transformation.
Capital Product said the deal will be funded by $182.5m in cash, which it has obtained from the planned sales of seven container ships this year, and debt financing.
“This recycling of capital from older to new clean technology is aligned with our commitment to increasing our footprint in gas and energy transition shipping,” Capital Product said then.
As part of the transition, Capital Product will be ditching the MLP structure and rebranding as Capital New Energy Carriers, with an expected delivered fleet of 18 modern LNG carriers by 2027.
So, as rightly pointed out by Tusiani, chairman emeritus of Poten & Partners and an authority on all things gas, the Marinakis approach to an LNG build-up is quite different from its newly private peers.
“You’ve bucked the trend,” he told Marinakis onstage at the Pierre Hotel.
The shipowner reminded him that neither he nor Capital was new to the New York public markets, having first explored an IPO in 2005 that he abandoned for insufficient pricing.
A few years later, Capital Product and the appropriately named pure-play Crude Carriers were able to come public.
In 2019, Capital Product spun off its crude and product carriers into Diamond S Shipping, which was later acquired by New York-listed International Seaways.
“We’ve been involved in capital markets 17 or 18 years,” Marinakis told Tusiani.
“I’m always in favour of the capital markets. Here in New York, you have access to substantial amounts of money. I think we’re in the right place and fully support it.”
Pressed on his favourite choice for an alternative fuel over the next 20 years, Marinakis stayed on point with his enthusiasm on LNG.
“The infrastructure is there,” he said. “The price of the commodity, the safety, from what we’ve seen so far, we vote for LNG. It’s cleaner.
“And as far as the propulsion of engines, it’s been tested and works. I find it more conservative to go for LNG right now.”
Tusiani also wondered about the bullishness towards LNG as a commodity, saying Marinakis had secured an outsize chunk of the overall LNG carrier newbuilding book
“We see a lot of projects delayed, but eventually, in 2028 or 2029 they’re coming up,” the tycoon replied.
“A number of turbine vessels need to be replaced eventually. The process has just been delayed. I was expecting it to come earlier.”
Tusiani pressed on whether already-high newbuilding prices could be expected to climb further.
“I don’t know how much more they will go up, but definitely I don’t see them going down,” Marinakis said to laughter from the audience.
So Marinakis has made big news with a new love for PSVs — “We see some light in the tunnel,” he said — and he’s doing it his way with an older flame in LNG.
It’s the public way in the world’s financial capital, moving fast within the public markets after others have rushed out.
But it’s the Marinakis way, and the man is standing by it.
