Private investment bank Berenberg has brushed off the pandemic by raising €100m ($119m) for its second shipping fund, launched with a strengthened management team.

The German bank intends to grow its second fund to invest in shipping debt to €500m over the next 12 months.

A first fund launched in 2016 has grown to €500m on the back of shipping debt.

The targeted growth in the ­second fund would take its investment tally spread over the two funds to more than €1bn.

Philipp Wunschmann, who has headed the shipping desk of the bank for the past five years, said the move reflects an ambition to emerge as one of the “relevant banks in Europe for shipping”.

“We have made headway in doing that. We are on the list of most CFOs when they talk about maritime banking and are better known in the market than five years ago,” he said.

The Hamburg-based bank recently appointed two senior managers — Jill Kabelitz and Felix Ulbricht — to help achieve its goals and run its operations in Germany, Cyprus and Greece.

Both have more than 20 years’ experience in the banking sector with Unicredit, DVB Bank, Deutsche Bank and shipping operator Hansa Heavy Lift.

Ship finance is at a pivotal moment, Wunschmann believes.

“The decade of debt restructuring is over,” he said.

“The last 10 years were a decade of deep debt restructuring — most traditional ship-lending banks had to clear their portfolios and exit. There’s a kind of ‘new normal’ for the financing side.”

Wunschmann thinks the ability to raise the funds in the middle of the pandemic shows that institutional investors’ perception of ship­ping has changed.

Rediscovering shipping

Felix Ulbricht has more than two decades of banking experience. Photo: Marine Money

That shift has been helped by the performance of high-profile names such as Hapag-Lloyd and Maersk producing good results.

“It really brings the industry slowly back on the radar of the ­conservative investor scene of institutional money,” he said.

“Imagine a fund manager investing in commercial real estate or renewable energies who realises they don’t bring any return any more. They read about Maersk and Hapag and guess what? They are open for rediscovering and revisiting the area.”

These are early days, he added, “but if the industry does the right things, there’s a good chance that the patient money will be willing to come back to the table”.

That change is good news for Berenberg. It has started investing the initial €100m it raised in ­September for its second fund.

The first fund has grown to €500m on the back of shipping debt linked to around 130 vessels. About 90% is invested and returns of up to 5% are good enough to attract conservative investment companies.

Most of the debt is sourced from the German, Greek and Cypriot markets.

Equity recycling

Hamburg headquarters of the private banking company Berenberg in northern Germany. Photo: Scanpix

The initial loans were traditional ship mortgage financing sourced by loan portfolio sales. Part of these were acquired from Royal Bank of Scotland and Commerzbank, using external funds from Japanese investment house Orix Corp.

But in the past two or three years, Berenberg has relied on ­traditional asset-based lending from its shipowning clients.

In the coming years, the ship finance market will witness a move away from debt restructuring and towards “equity recycling”, according to Wunschmann.

That view is based on a premise that private equity investments made between 2010 and 2015 are coming to the end of their investment cycle. The expectation is that investors will be looking to exit shipping.

“This is the next source for us in terms of the market opportunity of secondhand vessels,” he said.

In addition, there remains “a ­certain reluctance of new equity providers to come into the game”.

So Berenberg may look at ways to increase the provision of capital from 50% to as much as 80%.

That might involve providing capital for more structured and slightly riskier investments. That could also benefit from the change in perception of shipping.

“Three years ago, going out to ­promote shipping debt was about negative shipping and ship financing headlines all over,” he said.

“Today, if we go out, the first question is about ESG [environmental, social and corporate governance] and different things, they don’t question shipping in general. It has changed.”

This story has been amended since publication to reflect that Berenberg might look at ways to boost its provision of capital to 80% from 50%.