Bulker owner Belships has bought more stake in the Norwegian branch of its operating arm, Lighthouse Navigation, while selling off similar business in Asia.
The move will “focus and simplify” Belships’ involvement in the bulker operating business, according to chief executive Lars Christian Skarsgard.
Belships, which owns a fleet of supramax and ultramax bulkers, has raised its interest in Oslo-based Lighthouse Navigation Management from 50% to 67%. The rest is owned by key employees.
The shipowner has also sold its 50.1% stake in Lighthouse Navigation Pte, which handles business from its offices in Bangkok and Melbourne.
The stake was bought by the Singapore-based company’s leading employees — who already owned 49.9% — under the name Lighthouse Asia.
The transaction has been completed but the sale price was not disclosed.
Belships said it will receive the cash consideration over the next 15 months.
Skarsgard said: “Ever since incorporation, Lighthouse Navigation has been a success story and this ownership change is to focus and simplify Belships’ involvement within dry bulk operating businesses.
“This is a transaction conducted in good spirit, and the commercial management of the Belships fleet will continue to be handled in the same manner as today, in cooperation between the offices in Bangkok and Oslo.”
Lighthouse is the exclusive commercial manager of the Belships fleet and operates chartered-in vessels in the ultramax, supramax and handysize segments.
The platform has been Belships’ secret weapon in recent years, particularly during times where freight markets have been high.
Lighthouse contributed $9.6m to Belships’ $40.8m in Ebitda during the fourth quarter of last year — equivalent to 24%.
This contribution has been even greater when freight markets have been strong. The platform contributed as much as 40% of Belships’ Ebitda during the fourth quarter of 2021, for example.
Analysts think that the divestment of the Asian business could dull Lighthouse’s contribution to Belships’ bottom line going forward.
Fearnleys Securities said that, while cash income from the sale will begin this quarter, “overall numbers/contribution to [Belships] will be somewhat lower than up until now”.
Lighthouse’s Oslo office, led by managing director Jan Christian Tungland, has 13 staff in total, according to its website.
The Asia bases have 20 staff in Bangkok, eight in Singapore and three in Melbourne.
The Bangkok office was co-founded in 2009 by Anders Soedergren and Helge Bruns, who are now directors of the outfit, and Frank Teeuwen, who is a consultant.
Commercial platform Lighthouse was based in Bangkok up until 2020, when Belships added the desk at its headquarters in Oslo.
Belships merged with the Frode Teigen’s Lighthouse Group in early 2019, which took its fleet to 20 ships.
The fleet has grown to 40 vessels since then, including 10 newbuildings that will be acquired on long-term leases.
In 2019, the outfit headhunted Skarsgard from broker Fearnleys to become the new CEO.
This is not the first move Belships has made to simplify its corporate structure — and raise some cash.
Last year, Belships sold 100% of its in-house ship management platform Belships Management (Singapore) to V.Group. The technical and crew management company was established in 1983 and manages Belships’ bulkers and vessels for other international clients.
Skarsgard said at the time that the sale would enable Belships to “leverage V.Group’s unique and fully scalable ship management platform”, accelerate its digitalisation and decarbonisation capabilities and make it easier to scale its fleet.
Analysts found it difficult to attach numbers to the Lighthouse deals, but praised the simplification of Belships’ corporate structure.
“While it’s hard to have a view on the deal without knowing valuation yet, its likely a strong deal from an operational and equity standpoint, we believe,” Fearnleys Securities said in a note on Monday.
“It makes [Belships] ‘cleaner’ by becoming more ‘steel only’ as well as only having Norwegian business in the company. Moreover, the deal will likely also free up a bit of cash, where [Belships] already sits with $128m per [fourth quarter of 2023].”
Fearnleys values Lighthouse Navigation at four times its enterprise value to Ebitda ratio, based on its long-term forward Ebitda estimate of $40m per annum.
“As such, it appears there will be limited changes to day-to-day operations, with Belships selling out of a series of JVs and subsidiaries across Asia and Australia in favour of holding a larger share of operations in the Atlantic — simplifying the business,” analysts from Pareto Dry Cargo said in a note on Monday.
The investment bank estimates Belships’ net asset value (NAV) at NOK 27 ($2.46) which it thinks will grow to NOK 31 by the end of this year.
The stock is currently trading at around 0.92 times its NAV, according to Pareto estimates. Fearnleys puts it at 0.9 times NAV.
Analysts think Belships shares have one-year forward price to equity ratio of 6.3 times, according to consensus estimates. This is slightly behind the 7.4 times average for other public bulker owners.
