Private German investment bank Berenberg has launched two new funds aimed at the ship mortgage loan market.
The closed-end multi-investor funds are for institutional investors and have been set up in tandem with Universal-Investment in Luxembourg as alternative investment fund manager.
Medium-sized shipowners will be financed with first lien ship mortgage loans in the major commercial shipping segments.
The bank's debt fund portfolio will thus grow to 20 funds by the end of 2021, with a total value of more than €5bn ($5.8bn), it said.
Investments in the new facilities can start at about €5m and are intended to "continue the successful history of the already existing funds", it added.
"The new funds complement a series of debt funds that have been launched exclusively for large institutional investors such as insurance companies and pension funds since 2016," said Lars Hagemann, head of structured finance at Berenberg.
"Through the funds, we provided direct loans in the segments of transaction financings, ship mortgage loans as well as financings for renewable energy and infrastructure projects," he added.
Berenberg is capitalising on the pull-back of traditional lenders from long-term ship finance, the lender said.
Sofia Harrschar, head of alternative investments at Universal-Investment, added: "Alternative investments such as debt funds are on a strong growth path. More and more investors, even with smaller volumes, are interested in the area of debt financing."
No losses during pandemic
Despite the pandemic, all Berenberg debt funds were able to continue without any losses, said Hagemann.
In total, Universal-Investment now administers 13 funds of this type with a volume of about €3bn for Berenberg, Germany's oldest bank.
The lender says it is the only bank to provide large transaction volumes of more than €150m in this niche sector.
Hamburg-based Berenberg added it pursues an "extremely conservative" approach to ship mortgage loans.
The maximum loan to value is 60%, and the figure for actual loans is on average significantly below this.
"Our long-standing international market presence enables constant access to attractive projects and the structuring expertise of our experienced financing specialists ensures an impeccable track record without defaults," said the lender's head of shipping Philipp Wunschmann.
Attractive risk profile
"Ship loans have a particularly attractive risk-return-profile due to their first-ranking collateralisation through fungible assets, and offer conservative investors an ideal entry into the long-neglected trend topic of maritime trade — which is and remains the backbone of the global economy," he added.
The Universal-Investment group is one of Europe's leading fund service platforms, with around €719bn in assets under administration.
Berenberg was founded in 1590. In June, the bank led a $135m refinancing of a sale-and-leaseback venture set up by Oaktree Capital Management and Star Bulk Carriers executives, Meerbaum Capital Solutions.
In November 2020, the lender brushed off the pandemic by raising €100m for its second shipping fund, launched with a strengthened management team.
The German bank intended to grow this shipping debt fund to €500m.
