Rising bulk markets have not shut the window for opportunistic acquisitions in dry bulk, believes Anglo International Shipping's founder Darren Maupin of fund manager Pilgrim Global.
At least not in the panamax to baby-capesize space, where Maupin and allied fund manager Tony Mallin of Star Capital Partners have taken their strategic stand.
From offices in Cardiff and London, Anglo International chief executive Steven Davies runs a fleet of eight ships, from panamax to mini-capesize. Mallin is chairman.
With today's lag between charter rates and secondhand prices, Maupin still sees scope for the kind of returns that originally led him to set up the company and start buying ships.
Born of exasperation
Maupin was already in dry bulk with a stake in Genco Shipping & Trading he had taken in 2016. But circumstances forced him to build up a fleet of his own starting in 2017.
"Anglo International was born of my exasperation that we couldn't take advantage of asset prices. In the depths of that bear market, we could not find any public companies worthy of investment because they were all insolvent," he told TradeWinds.
Maupin found Graig Shipping veteran Davies in harmony with his ideas — about taking advantage of a "generational opportunity in asset prices" through a low-leverage, low-overheads approach to owning assets that offered "conservatively over 20% internal rate of return (IRR)".
Today, he thinks the numbers still work, based on buying 10-year-old post-panamax ships.
"Most of the residual value risk can be taken out with one year's time-charter earnings. After that, based on a conservative assumption of average historical time charter rates, you still come out with 20% IRR," Maupin said.
He is reluctant to give a precise number but believes Anglo International could deploy several hundred million dollars over a 12-month period of time on that basis, possibly in the form of fleet deals. But the original exasperation still seems to be there.
"This is an incredibly capital-constrained industry," he said. "That is what has suppressed asset prices and the orderbook, and it's also what creates those returns."
He described every fund raise as an educational process.
Maupin is not naming his backers but TradeWinds understands that many of those he succeeds in educating are institutional and family-office funds, such as Salt Lake City-based Cynosure Investment Partners.
Led by former US treasury undersecretary Randal Quarles, Cynosure manages the Eccles fortune and those of other Utah-based wealthy families. The connection is reflected in the name of Anglo International's 98,000-dwt Anglo Cynosure (built 2012).
Anglo International's financial director is Andrew Broomhead, a veteran of handysize and supramax player Pacific Basin Shipping, who served as chief financial officer there. And as a shareholder in listed companies such as Genco and Eagle Bulk Shipping, Pilgrim Global has significant exposure both in supramaxes and capesizes.
But Maupin believes his Anglo International investment is correctly placed and further expansion will remain in the midsize to large segments.
"The opportunity in the smaller vessel space is more or less done," he said. "We are a tonnage provider, and very intentionally so. Tramping is a business where we don't think we can bring much to the table."
