Booming markets are attracting increasing numbers of investors looking to cash in on shipping’s soaring wealth.
Fearnley Securities Project Finance shipping portfolio increased by $280m in 2023 to a total value of $927m.
“The interest from investors has been overwhelming and we see no signs of it slowing” Axel Bendvold, head of project finance at Fearnley Securities, told TradeWinds.
The Norwegian firm raised equity for 17 new projects with a total value of NOK 5.3bn ($510m), buying 22 vessels, according to the annual report.
“It was a very active year. The vessels were a mix between newbuildings and secondhand tonnage, we were most active within the offshore and dry bulk segments,” he said.
Of the 17 projects, six were newbuilding projects within the product tanker, chemical tanker, bulker and multipurpose vessel sectors.
The project Ecotank AS ordered two LR2 product tanker newbuildings. The size of the project is $122.3m with a paid-in equity of $31.6m.
The two projects RFSea Infrastructure AS and RFSea Infrastructure AS II ordered a total of four chemical tankers. Each project has a size of $49.5m with a paid-in equity of $15m.
At the same time, 10 projects were realised distributing more than NOK 3.5bn to its shareholders.
The concluded shipping projects returned a weighted average internal rate of return of 14% per year in 2023.
The annual average return of the shipping portfolio has been 27% since 1998.
The current portfolio consists of 42 vessels spread across 35 projects, an increase of nine vessels and seven projects from 2022.
Fearnley Securities had a focus on offshore last year with five new platform supply vessel projects.
“Our view on the offshore segment remains positive. So far in 2024, we have raised equity for two offshore projects, one project owning a modern PSV and one project owning a subsea support and a seismic support vessel,” Bendvold said.
The report expects the fundamentals within the broader shipping industry to remain positive, particularly characterised by low orderbooks across most segments.
“We believe that uncertainties with regards to future environmental regulations, long lead times and limited shipyard capacity will keep orderbooks at relatively low level going forward,” the report said.
“Simultaneously, we believe that the demand outlook for most segments looks favourable which, hopefully, gives us a prolonged upcycle across most shipping segments.”
Many shipping investors prefer the project finance setup, according to Bendvold.
“We see continued interest from investors to invest in project finance structures,” he said.
“For them, it is a way of getting shipping and offshore exposure by co-investing directly in the steel alongside a shipowner, versus buying shares in a listed company. In that way, they get more control on what they buy, as one project usually owns one vessel with a specific strategy.”
“We also have a secondhand market for trading shares in our projects facilitating investors wanting to exit a project or investors wanting to invest in an existing project,” he said.
