Financial services firm Freedom Holding Corp (FHC) has struck a $400m deal to buy shipping investment bank Maxim Group.
New York-based Maxim has successfully raised money for mainly Greek-listed owners but has angered some shareholders who consider the share issues it oversees as dilutive.
Set up in 2002, it has worked with owners including Top Ships, Performance Shipping and Castor Maritime.
Kazakhstan and New York-based FHC, established in Moscow in 2008, said the takeover would expand its capital markets, research and investment banking capabilities.
The fee will be paid in cash and stock.
Both companies are listed on the Nasdaq.
Timur Turlov, chief executive of FHC, said: “We are committed to growing our global footprint, and we recognise that having a significant US presence is an important part of this strategy.
“Adding Maxim to our group as a trusted partner through this cornerstone transaction will turbocharge our growth as we continue to expand our US operations.”
Robert Wotczak, chief executive of FHC’s US operations, will be appointed executive chairman of Maxim Group.
Maxim co-president Clifford Teller will be promoted to CEO, while co-president and founder Chris Fiore will remain as president.
“We look forward to building on Maxim’s history of success and consistent profitability in varying market conditions,” said Wotczak.
“Having worked alongside many Maxim team members throughout my career, I have tremendous respect for and confidence in this team’s ability to accelerate growth across all business divisions.”
Big expansion planned
Teller said the transaction will allow his company to “expand exponentially” in all areas.
The Deal website reported that Maxim has placed more private investments in public equity than any other agents except HC Wainwright & Co and Roth Capital Partners.
But its approach divides opinion.
TradeWinds reported that in 2022, US-listed Performance Shipping, the Greek owner of six aframax tankers, received a delisting warning from the Nasdaq over its shares’ failure to trade above the minimum $1 benchmark for the previous 30 days.
Having essentially placed itself in this pickle through dilutive shares sales led by Maxim, Performance then announced it was doing yet another Maxim deal: raising about $6m by selling stock at $0.35 per share in a private placement with certain select investors.
Performance shares quickly slumped to $0.25 each.
As TradeWinds has reported, Performance is one of several small, mostly Greek owners that have contracted with Maxim to do highly dilutive offerings that typically package a common share with a warrant to buy additional stock.
There has been at least one notable success story.
Castor success story
Castor Maritime of Cyprus went from one vessel to a fleet of 29 mainly on the back of Maxim deals, although a share that once traded above $50 is about $1.27 today.
Disgruntled investors of another Maxim client — StealthGas spinoff Imperial Petroleum — publicly lambasted principal Harry Vafias on an earnings call last year, demanding that he stop selling stock.
Angry shareholders complained they were being diluted by repeat Maxim-run equity raises that cratered the share price.
Things got heated to the point that Vafias objected to “shouting and screaming” from the shareholders.
There is a growing perception that while the deals may benefit the shipowner and the select group of hedge funds or trading shops buying into them, they are in effect traps for the unsuspecting retail investor.
One shipowner executive who supports the deals told TradeWinds he has limited tolerance for this argument. Investors are attracted by the intrinsic volatility of the stocks, seeking outsize rewards, and shouldn’t be whining when they lose.
“These are not normal shipping companies, and someone looking for a 400% return on his investment has to know it comes with high risk,” he said.
And with a little research, they can read about the risk from the company itself.
Diana Shipping spin-off OceanPal, Seanergy Maritime and Globus Maritime have also worked with Maxim.
