Prexit? What Prexit?
The term applied to private equity’s exit from shipping investments in recent years was well earned as financial backers unwound their bets in multiple owners, but Oaktree Capital Management seems to be a different animal.
The California-based alternative investor has revealed its latest stake in New York-listed Eagle Bulk Shipping, and the position remains massive: nearly 3.8m shares or 27.6% of the company.
And while this is down from the 33% position Oaktree once had in the Connecticut-based shipowner, the financier remains the dry bulk player’s largest backer through an investment that began in 2012.
With Oaktree now passing a decade in the company, it is a lifetime in the world of private equity.
In contrast, another private equity firm who backed Eagle since its 2014 pre-packaged Chapter 11 reorganisation – GoldenTree Asset Management – completed a gradual selloff of its 22.6% stake in October 2021.
Three private equity firms that once held about 60% combined in New York-based peer Genco Shipping & Trading also sold out of their positions over the same period.
Howard Marks-led Oaktree has done some pruning on the Eagle position over time, but the most recent disposals reflected in Friday's public filing were in April 2021 – a period during which dry bulk shares were in rally mode.
With a share price just below $51 in trading on Friday, the value of Oaktree's holding is now about $194m.
Oaktree is one of the oldest private equity investors in shipping, having been an early backer of Peter Georgiopoulos’ 2001 initial public offering company General Maritime and later Genco Shipping & Trading. Both investments brought the financier outsized returns.
Oaktree also has been a long-time holder in another major dry bulk owner, Star Bulk Carriers of Greece.
At last reporting Oaktree held more than 26m Star shares, or 25.4%.
At Friday's trading price just below $21, that stake is worth about $546m.
One factor that may lend support to Oaktree's continued stake in both owners is that dry bulk companies began enacting upsized dividends as the market recovered from a Covid-influenced demand destruction in 2020.
For example, Eagle Bulk paid out $8.05 in dividends per share over the course of 2022. This would have brought Oaktree about $30.6m given the shareholding reported on Friday.
Star Bulk paid out $6.50 in dividends over 2022. This would have been worth $169m to Oaktree.
