George Youroukos and Ian Webber are fast becoming the busiest double act in the containership sale-and-purchase market.
The Global Ship Lease (GSL) pairing has orchestrated the acquisition of 23 such vessels for a combined cost of about $500m in the year to date.
In doing so, executive chairman Youroukos and chief executive Webber have completed three major S&P transactions, including two this month.
And, despite escalating assets prices, they feel it could still be a good time to buy.
This reflects a philosophy that, put bluntly, involves buying older ships cheaply and trading them down to scrap value, or as near as possible.
In the latest deal, unveiled on 16 June, the New York Stock Exchange-listed company acquired the 5,470-teu Blandine, Bernadette (both built 2009), Barbara and Balbina (both built 2010). GSL paid $148m to acquire the four high-reefer boxships from Germany’s Peter Dohle Schiffharts.
That price is way below what Youroukos said is their charter-free value of about $55m each. The ships have also been chartered to AP Moller-Maersk at below market rates.
It has echoes of the first of the three deals this year — a sale-and-leaseback transaction that the company completed with Maersk in February, when GSL acquired seven 6,000-teu ships averaging around 20 years old for $116m.
The challenge is that the pool of potential deals is drying up, which could pit GSL against the greater firepower of liner companies that are the main buyers of containerships in the market.
“It’s a market that has gone up to levels where there are not many buyers. That also gives us a big advantage,” Youroukos said.
“That gives us the ability to have first look in many deals that many don’t. That’s some leverage.”
That insight may have played a part in helping GSL close a third deal for 2021, completed this month, when it agreed to purchase 12 containerships averaging about 3,000 teu from Borealis Finance.
Youroukos described the $234m deal as a win-win for buyer and seller: “I don’t believe in this market — where there is so much information moving so fast — that anybody can take the other guy for a ride. The art is to find a great deal for both parties.”
Limited risk
He added that the two deals completed in June have been under negotiation for months, and happened to have been completed within days of one another.
GSL would only buy when it sees the right deals, Youroukos said — “It’s not like we’re out there and shooting every bird that passes outside the window.”
Although boxship prices have risen steeply, the increase in charter rates makes it possible to do deals. The hope is that even if the market crashes, which is deemed unlikely, the risk is limited by charters with strong liner operators.
“We either go ahead and buy ships at a price we feel is good, or buy ships with a charter that will amortise the charter and leave us at the end of period with a low residual value,” Youroukos explained.
GSL has undergone a remarkable transformation since completing a $780m merger with Youroukos-controlled Poseidon Containers in late 2018.
That doubled the size of the GSL fleet to 38 vessels, compared with around 49 vessels at present.
When it has taken delivery later in the year of the remaining 17 vessels it has bought, it will control 66 vessels of between 1,118 teu and 11,040 teu.
That will lift it into the top 10 tonnage providers, with a focus on niche areas, notably the reefer container business.
“There’s always ways we can grow more, but only if we have the right deal,” Youroukos said.
For now, the company has no interest in newbuildings, and even five-year-old vessels are too young.
That is partly due to the desire for immediate yields on investments, but also because of concerns about decarbonisation and fuel strategy.
“Increasingly we’re looking at mid-life and slightly older ships,” Webber said. “And increasingly we look to see we can make a financial return over a five-year period.”
The prospects for the market remain strong, and Youroukos is hoping for “at least another 12 months of great markets”.
