Luxembourg fund manager Flexam Invest is eyeing more shipping sale and leaseback deals following its second transaction with Sweden's Northern Offshore Group (NOG).
Flexam told TradeWinds it has bought two 26-metre crew transfer and wind farm support vessels (CTVs) from an unnamed owner and chartered them to NOG for around five or six years to grow the operator's fleet.
And more action could be on the cards, according to Flexam co-founder Fabrice Fraikin.
The banker started Flexam in 2011 with Stephan Cromback.
Fraikin told TradeWinds: "We have always invested in industrial assets. We had worked with the French leisure boat company Beneteau in the past, but we had more invested in rolling stock and aviation previously.
Last summer, Flexam carried out a sale and leaseback deal for 25 CTVs for NOG's UK subsidiary Mareel, its first industrial shipping deal.
Fraikin explained how this came about.
"Through a Norwegian broker that we had a conversation with, we were explaining that we were looking to invest in some niche shipping area," he said.
"We wanted to be different from all the other big lessors that leased tankers or containerships."
He said Flexam also wanted to be closer to investments that make an impact, with environment, social and governance factors representing a major concern for the company.
Fraikin said: "When the broker confirmed he could talk to some companies that maintained offshore wind farms we saw that we could kill two birds with one stone: first, get into the shipping niche and second, be close to impactful investments."
Growth looking inevitable
Flexam believes the offshore wind farm sector will grow in the future, with big plans afoot in France, Italy, Taiwan and the US, among others.
"Being close to NOG, which is really important to us, allows us to benefit from the development of these farms and work more with NOG and help them develop their fleet so they can enhance their partnership with Siemens, Orsted and these operators in Europe and then maybe overseas," Fraikin said.
"When we talk to NOG they say it's important for them to buy these ships, because they have new features that their clients are expecting."
Regarding future plans, the financier said the company would be happy to boost its momentum and its presence in the wind farm sector.
"It could be jack-ups, it could be SOVs [service operation vessels]. All these things we are ready to look at, definitely," he said.
Fraikin said the company has not ruled out branching out into other shipping areas.
"But I have to say it seems to be a more risky environment, and we have this very strong foothold within ESG. We'd be happy to finance ships that seem to meet the new environmental standards," he said.
Flexam sources its equity from high-net worth individuals, family investment offices and institutions like pensions funds and insurance companies, as well as debt from senior lenders, debt funds or mezzanine lenders.
The company then combines this into a vehicle able to buy assets and then lease them on midterm deals.
Destined for Germany
The two new vessels will be operated by NOG's Danish unit Northern Offshore Services (NOS).
They are larger at 26 metres than the ones financed for Mareel last year.
The ships will work off Germany under bareboat charters.
David Kristensson, chief executive of NOG, said: "We are pleased to continue the efficient relationship with Flexam. These vessels are part of our strategy in keeping our fleet at the highest standards and in line with client expectations."
Flexam operates with a closed-ended fund, with the price tag for each investment between €10m ($11.42m) and €30m.
In the fourth quarter of 2020 and the first three months of 2021, it plans to raise money for a new fund in order to continue supporting companies like NOG and other businesses.
"We've been very impressed with the quality of operation and financial resilience that NOG group has shown since our first investment," Fraikin said.
"We are really happy they've asked us to finance more ships with them — not to do one shot, but to be more like long-term financial partners to these guys."
Flexam said the pandemic has not affected its plans.
"Our business has proven to be resilient and NOG's business has continued as well," said Fraikin.
"NOG has a great growth plan and we are really happy to be in that picture as well."
Flexam was advised by Allen & Overy and Loyens, while NOS and NOG were advised by HFW.
