For Ed Buttery, chief executive of Taylor Maritime Investments (TMI), listing his bulker company this year in London was about one thing: accessing capital for growth.

But going public is not for the faint-hearted, as he explained to a Norton Rose Fulbright conference on initial public offerings in shipping.

Buttery said the possibilities of raising long-term capital are there, especially at the London Stock Exchange.

And he added that in a rising market, shares tend to increase in price faster than ship values, so companies can find themselves trading at a premium to net asset value, which benefits investors.

But he had words of caution.

"List if you're prepared ... to show everybody everything, because there are no secrets in a public company," he said.

"You have to be answerable and transparent to the public, everything gets checked... You have to be ready to show all your structures and absolutely don't mess around with the quality of banks and lawyers."

Beware of the downsides

Christa Volpicelli is managing director and head of maritime investment banking at Citi. Photo: G Morty Ortega/Marine Money

Christa Volpicelli, managing director and head of maritime investment banking at Citi, said there are clear benefits to IPOs, but the downside of being in the public eye — reporting financial results, explaining the strategy — can be "quite difficult" in cyclical markets.

She added that using stock as a currency in transactions is possible if the shares trade well.

TMI's $253.7m May listing brought together six or seven different ownership joint ventures to consolidate 23 bulkers "under one roof", according to Buttery.

Consensus achieved

The trick was to agree the same terms with all parties several weeks before the IPO.

"There was a huge amount of juggling to do," Buttery said.

The CEO added that the beauty of going somewhere like the London Stock Exchange is that there are insurance companies and pension funds much more suited to investing in low-leverage, long-term-yield paying shipping companies than private equity funds, who want to exit after three to five years.

Buttery admitted: "You need a hell of a lot of luck and a lot of things to fall into place."

He explained that TMI wanted to see the market recover a little bit before listing, but for it to only be at the beginning of that process, with significant upside available to backers.

Bringing earnings visibility

The idea was to create more stability in a volatile segment.

No investors were pushing TMI to take on debt, Buttery said.

"We ship necessity goods that are in demand even when the world is not booming. Demand for handysizes is very stable," Buttery said.

"If you buy at the right price with low debt you're always going to make money," he added.

TMI has worked towards having a balance of short, medium and long-term charters since the IPO, cutting down on voyage charters.

The CEO revealed that the company is also looking at "really interesting" ways of hedging the future risk, "which is really exciting to me too".

TMI has been focused heavily on UK investors, which form the vast majority of its backers.

But Buttery said the company is now applying for licences so that the fund can be marketed further afield.