Diamond S Shipping’s two largest shareholders are raking in a further $9.6m from a 21 November equity offering in which they began to unload their positions.
WL Ross and First Reserve are benefiting from a decision by the deal’s underwriters, Pareto Securities, to fully exercise their over-allotment option on the original $55.3m deal.
The private equity backers are profiting from how Diamond S has traded since the equity sale. Shares have closed above the $13.75 deal price every day in the interim, making the economics favourable for Pareto to buy more shares.
The sales by First Reserve and WL Ross are part of what has been described as “Prexit” — that is, private equity’s attempts to escape from generally loss-making shipping bets as funds near the end of their investment horizons.
First Reserve was Diamond S’s original major backer and is cutting its stake in a dramatic way, while WL Ross’s reduction is more of a trim.
First Reserve sold 4m shares — half of its stake — in the main deal for $55m. WL Ross, an investor since 2011, sold 661,000 shares ($9.1m), a reduction of 7%.
Now First Reserve has sold Pareto a further 603,000 shares for $8.3m and WL Ross a further 99,000 for $1.34m.
After the latest sales, WL Ross continues to hold 8.9m shares worth about $128.8m at Thursday’s closing price of $14.47. It remains the company’s largest holder at some 22%.
WL Ross is the investment firm founded by and formerly controlled by Wilbur Ross, now the US commerce secretary.
First Reserve holds 3.55m shares worth $51.4m on the same basis, a stake of 8.8%.
Craig Stevenson-led Diamond S is a Connecticut-based owner of medium-range product tankers and suezmax crude tankers. It is listed on the New York Stock Exchange.
It was trading around $14.80 per share on Friday afternoon, a gain of 2% on the day.
