Oslo-based Maritime & Merchant Bank (M&M) is pressing ahead with its plans for growth, which will include an equity raise in the near future and possibly the acquisition of other lenders’ shipping loans.
Chief executive Halvor Sveen told TradeWinds that the bank is working on a private placement of shares, which will be completed before the summer.
A raise of $30m in new equity was mooted in February, but Sveen could not confirm whether this figure is still part of the game plan, saying “at least something around that figure".
The bank’s major shareholders include big names such as Henning Oldendorff, Endre Rosjo, Nikolaus and Christian Oldendorff, Arne Blystad, Arne Fredly and the Roth family, who Sveen said have tasked him with growing the bank “in a controlled fashion”.
“Growth for us is to put new loans with the sufficient credit quality into the book and each project lives its own life — it’s not like a volume-oriented consumer finance bank,” he said.
“We are taking it step by step and paying close attention to diversification of the portfolio and, at any time, trying to be oriented to where we are in the cycle.”
Other people's loans
With its eye on future growth, Sveen said M&M has from time to time looked at picking up shipping loans being sold off by other banks, but has not been able to conclude any deals yet.
“We have been offered portfolios and, as a general comment, these loans do not fit into our lending policy ” Sveen said.
“But we have recently come across something that might have interest for us, but it’s far too early to say.”
In the meantime, M&M remains focused on offering first-priority ship mortgages for secondhand vessel acquisitions, usually on a 50% loan-to-value basis over a period of three to five years.
“We haven’t done newbuildings yet,” Sveen said.
Client appetites
Its clients have shown a preference for acquiring boxships and tankers during the first three months of 2019, but dry bulk and LPG are back in the picture too.
M&M’s exposure to those segments today is more than triple the level seen 12 months ago.
“We haven’t done anything on the offshore side yet,” Sveen said. “We are very enthusiastic about the offshore industry; this is our national industry with a wide and unique competence."
But, while subsea activity is booming and is benefiting from huge investments, the offshore support vessel sector is still plagued by structural overcapacity and the bank is not currently in a position to help.
“It is very hard to determine genuine values as there are almost no willing-seller willing-buyer transactions," Sveen said. "Unfortunately, the situation has caused substantial losses, including Norwegian interests.
“So far, it’s extremely hard to tell something sensible about the values because there are [vessels in] lay-up conditions and those sales that are executed are either forced sales or there is part of a restructuring sale.
“It’s a shame, it’s our national industry that we’d really like to support, but we haven’t found an entrance,” Sveen said.
He added that investment in the subsea sector lies outside the bank’s remit.
International ambitions
M&M’s client base is around 50% Norwegian and 50% from the rest of the world, mainly Europe with some interests in Singapore.
The bank is receiving a lot of enquiries from Greece, which Sveen said is probably the largest market potential outside of Norway.
An M&M representative, vice president Kari Trondsen, is already at work in Athens and the bank is looking to put “feet on the ground” in Singapore and Hamburg too.
Meanwhile, Sveen said Oslo provides an attractive environment for ship finance.
"It's the finance hub of Europe at least, maybe even the world," he said.
"I cannot think of any other place that has raised so much debt and equity for the maritime sector.
"There are obvious reasons behind it. It's a transparent place, regulated, its documentation processes are good and seem to fit the market well."
Click here to keep up to date with TradeWinds' coverage of Nor-Shipping 2019.
