A debt fund launched by Pillarstone is targeting $1bn in distressed shipping assets.
Finav, as the fund is known, has made a good start by acquiring distressed debt with a book value of $350m from two Italian banks.
This means it is the biggest distressed-asset shipping fund in Italy. It will add to about $2bn of assets under management that Pillarston hasin the distressed shipping and corporate sector.
The fund is focused on distressed assets acquired from Intesa Sanpaolo and UniCredit, but it is an open fund and the idea is to continue to grow it up to $1bn, says Pillarstone Italy managing partner Gaudenzio Bonaldo Gregori.
Invading banks' space
The fund is one of the ventures promoted by KKR-backed Pillarstone, which is to move into the lending space previously occupied by the banks.
“The market has changed,” Bonaldo Gregori says. “Italian banks have little appetite in shipping in terms of new lending or keeping shipping exposure on their books. You need to have access to alternative sources of money, which is private money and capital markets.”
Trying to change that trend is wishful thinking. So it’s being able to find who will be the player in that context to ride that paradigm shift in the market.
Gaudenzio Bonaldo Gregori
“Trying to change that trend is wishful thinking,” he says. “So it’s being able to find who will be the player in that context to ride that paradigm shift in the market.”
The Finav fund comprises debt that banks classify as unlikely to pay. Such debts are difficult for banks to restructure.
“The problem is rescheduling and extending loans but without putting in new money,” Bonaldo Gregori says. “That has been a non-effective way to manage the situations.”
Restructuring attempts
There had been attempts to restructure loans in the Finav portfolio. These had come to nothing due to a shortage of capital, which left the loans in default under the restructuring plan.
“I think banks have to realise that is not going to be the model to resolve those situations,” Bonaldo Gregori says.
“And they have decided to find alternative solutions” in order to find “a stable, long-term solution for distressed assets".
"So they have trusted with us $350m of loans, and the idea is to find a way to sustain those businesses,” he adds.
Names of the companies are not disclosed, but some Italian reports point to Perseveranza di Navigazione, Elbana di Navigazione, Morfini, Finaval and Motia Compagnia di Navigazione.
