The initial public offering market should open up for shipping in 2018 or 2019, two analysts said at a TradeWinds conference.
Deutsche Bank’s Amit Mehrotra and UBS’s Spiro Dounis both said that the window for launching IPOs is closed now because of the spread between net asset value and stock prices remains too wide.
Shipowners will push into public markets at a time when their shares are likely to sell at a wide discount to the value of their fleets.
Spread to slim
But that spread is expected to narrow in a few years.
“I think 2019 is going to be the most amazing year for shipping,” said analyst Amit Mehrotra when asked by TradeWinds finance reporter Joe Brady about when to expect IPOs.
The analyst later said in an interview that his view is based on data that shows that shipping upcycles and downcycles typically last five years, though he believes dry-bulk shipping’s slump may last longer and limited capital for newbuildings may help tankers shorten the trend.
Strong recovery ahead
“There will be a clearing and hopefully a strong recovery by 2019, and the crude tanker market will be in the second year of an upcycle by then, because I expect the market to recover by 2018,” he said in the sidelines of the TradeWinds Shipowners Forum USA.
“And the containership market I think at the end of the day hopefully we’ll see some pull on global growth, and the capacity issues that are impacting that sector of the market will have ironed out by 2019.”
Dounis was more bullish about the reopening of the IPO window.
Gardening for green shoots
“I don’t know if we have to wait until 2019, you’ll probably start to see the green shoots in 2018,” he said. “If there is going to be an IPO, it’s going to be before things get really exciting.”
He said products tankers and chemical tankers may provide the most compelling story to back a successful IPO.
