Christos Papanicolaou was pushing an initial public offering for a company called Universal Maritime nearly a decade ago and got a frank opinion from one banker.

That was David Herman, head of maritime investment banking for Credit Suisse in New York for a dozen years.

Despite Papanicolaou’s persist­ent efforts, the IPO failed in 2012.

“I think I may have been the only banker on Wall Street who told him I didn’t think the deal could get done,” Herman recalled.

“And after some months of effort and a whole lot of legal bills, he found out the hard way. I don’t always like to be right, but I don’t let him forget that.”

Papanicolaou went on to become head of business development for Greenwich, Connecticut-based tanker brokerage Charles R Weber.

First foray

There were no hard feelings over Herman’s take on the IPO, rather the opposite. The two formed a business relationship that culminated this year in Herman being hired to head Weber’s first foray into ship finance.

The two men sat down for an interview with TradeWinds to make Weber’s first public disclosure of the venture, which was launched just before the Covid-19 pandemic shuttered business in the US.

Social distancing and working remotely have been challenges in getting the new division going, but the pair said a few deals have already been completed and many other potential transactions are in the pipeline.

The financial arm of the brokerage is eyeing sale-and-leaseback deals, project financings, advisory work and other business leveraging Weber’s expertise in the tanker market and Herman’s long experience on Wall Street.

Herman and Papanicolaou tell the Universal Maritime story not just to illustrate how they met, but to suggest how Weber’s capital markets arm might present clients with solutions that are not available through banks or traditional finance houses.

Papanicolaou pursued a tanker flotation first with employer veteran shipowner Jimmy Drakos and later in tandem with Geden Holdings of Turkey, investigating IPOs in New York and Oslo, only to be told in the end that the deal could not work.

“We kind of got brought down the road for a year — ‘we can do this, we can do this’ — until finally the equity capital markets guy says, ‘No, we’re not going out the door’,” Papanicolaou said.

“That’s a deflating conversation. It was probably the most depressing conversation I can recall. ­Horrible. But we think we can speak to clients before they get to the point of what happened to me.

“David’s ability to have a blunt conversation and say, ‘Maybe you can’t do that, but there are alternatives, here’s what we can do’ is an attractive thing for clients.”

Great platform

Herman, who left Credit Suisse in 2012, said he and Papanicolaou kept in touch over the years and worked on several projects together, including a sale-and-leaseback deal.

“For a couple years, we’ve had the idea of trying to figure out a way to work together, and earlier this year the pieces kind of fell in place and we were able to make it happen,” Herman said.

“I think of Christos as a shipping guy with a lot of finance capability, and I’m a finance guy with a little bit of shipping capability. And so I think we can bounce ideas off each other and get to the right answer for clients.”

Herman extolled the advantages of Weber’s solid tanker pedigree for his work: “The way I see it is the firm’s got a great platform.

“Historically, most of the business has been traditional spot and time charters, and we’ve got a great research department. But as we’re looking to grow our projects business and do more sale and purchase, combining it with access to capital allows a more holistic solution.

“It also gives us the ability to not only work with shipowner clients but also work with financial institutions. These may be investors who own ships, investors looking to buy ships or investors looking to provide capital.”

Herman described the capital sources as “across the board”, including commercial banks, alternative financiers, shipping funds, hedge funds and family offices.

“For not having launched the division formally yet, we’ve got some really nice traction,” he said. “To me, that validates the thesis.”