Himalaya Shipping has wrapped its initial public offering of shares in New York on Friday by closing a book that was oversubscribed by three times.
Speaking after ringing the opening bell at the New York Stock Exchange, chief executive Herman Billung told TradeWinds he was “extremely proud” of what the newcastlemax owner has accomplished.
Billung said the book was built with commitments from big institutional and long-only investors, all of whom seem familiar and comfortable with dry-bulk shipping.
“Now the job starts — to return capital to our shareholders,” he said.
Himalaya started its journey to New York in December when it made its first confidential filing to commence the listing process. Since then, there have been concerns surrounding the stability of the wider financial environment. Meanwhile, dry bulk has weathered the seasonally weakest quarter of the year.
Billung said that Himalaya of course had nerves about the economic backdrop but sailed through unscathed.
He and his team have spent the past two days conducting a roadshow with investors in Boston and New York. Himalaya’s backer and major shareholder Tor Olav Troim has presented to the finance community in Oslo.
Billung said it has been the supply story for newcastlemaxes that has been most compelling for would-be investors in Himalaya.
“You have limited yard capacity, new regulations and the orderbook when you look at capes on a stand-alone basis is 5.5%,” he told TradeWinds.
“We know there are basically no vessels coming in 2025 and you can’t get vessels before 2025 right now because the yards are busy building container vessels and other ships.”
It is for this same reason that Troim saw potential in Himalaya’s proposition from the beginning, Billung added.
“I think the main sponsor when he kind of decided to go for this project back almost three years ago now, already at that time it was looking at the supply situation and that has just improved,” he said.
Meanwhile, the large fleet of capesize bulkers that were ordered before 2010 during the last great boom are aging and will soon be phased out, he added.
Himalaya aims to replicate 2020 Bulkers’ successful formula of distributing monthly dividends to its investors, but will first need to take delivery of more of its newbuildings and begin earning revenue.
The shipowner has two dual-fuel bulkers on the water that can burn both LNG and conventional marine fuels, and it has a further 10 scheduled for delivery in 2024 from China’s New Times Shipbuilding.
The first of the scrubber-fitted vessels — the 210,000-dwt Mount Norefjell — was delivered this month.
Two more are due in the next month, and a further three by the end of the year. The remaining six vessels are expected to be delivered by the end of the third quarter of 2024.
The ships cost $70m on average and are lease-financed with bareboat charters back to Himalaya, which is spending $2.4m on each scrubber-fitting.
Billung has a seasoned history of working for dual-listed public owners including Golden Ocean, Star Bulk and Songa Bulk. He is also currently chief executive of newcastlemax owner 2020 Bulkers as well as Himalaya.
He has completed a few Oslo listings, but said the New York IPO process was as new and exciting for him as it was for everyone else.
Himalaya offered 7.72m of its shares to investors in New York at a price of $5.80 each in a deal that will close on 4 April.
This could raise $44.8m, but net proceeds will be $40.5m after deducting underwriting discounts, commissions and estimated expenses.
The price compares to its trading price of NOK 61.20 ($5.88) in Oslo on Friday morning.
Himalaya has also granted underwriters a 30-day option to buy another 1.158m shares at the same price. This would be worth another $6.7m.
Himalaya intends to use the net proceeds from the IPO — at least $40.5m — for general corporate purposes, possibly including funding its vessels under construction, maintaining liquidity, repaying debt and for use as working capital.
The offering’s underwriters have a 30-day option to buy another 1.16m shares at the same price as in the IPO, which would be worth another $6.7m. Billung told TradeWinds that no decision has been made about whether this option will be exercised.
Shareholdings
Affinity Shipholding, part of shipbroker Affinity (Shipping)’s group of companies, will hold a 5.4% stake in Himalaya once the IPO has been settled, if overallotment options are not exercised, down from just over 10% before the process.
Because the offering was oversubscribed, Affinity Shipholdings I has signed an agreement to lend 1.16m shares to DNB Markets.
Richard Fulford-Smith, managing partner of the Affinity group and a long-time business partner with Troim, was present at the Himalaya’s bell-ringing ceremony in New York.
Troim’s investment vehicle Drew Holdings Ltd owns 32.5% of Himalaya following the IPO, slightly less than previously.
Billung and Bjorn Isaksen, Himalaya’s chairman, have subscribed for and been allocated shares in the IPO.
Himalaya’s shares in Oslo closed at NOK 61.6 ($5.88) on Friday.
