The coronavirus pandemic has only sped up the Blue Ocean Fund’s maritime lending.
The EnTrust Global fund — which became independent of New York-traded asset manager Legg Mason as of last Friday — has doled out portions of its $1.5bn in capital in more than 13 deals this year as banks continue to pull back from shipping.
“We have a very substantial pipeline. We’re deploying capital," Blue Ocean's senior managing director Svein Engh told TradeWinds.
"So far this year, I believe we have closed [between] 13 and 15 transactions. Obviously that should tell you how busy we are.
"It’s a very very hardworking team. That’s a reflection on the success we’ve had on winning mandates."
The fund was established four years ago with the primary intention to provide private shipowners with funding as traditional banks pulled away from the industry in the wake of the 2008 financial crisis.
Around the time of its creation, US investment manager Legg Mason acquired 65% of New York-headquartered EnTrust. That relationship ended last week with EnTrust chief executive Gregg Hymowitz reacquiring the stake as investment firm Franklin Templeton closed on its $4.5bn acquisition of Legg Mason.
As private entities, EnTrust and Blue Ocean can likely be more agile as the Covid-19 outbreak has sped up the trends that prompted the fund's creation, Hymowitz and Engh said.
"We’ve seen that banks have pulled back even further," said Engh, who is based in New York.
"They're in preservation mode."
Beyond that, the fund still intends to hit its return targets, which Engh and Hymowitz declined to disclose, but have previously told TradeWinds would be between 8% and 10% on an annual basis.
It will maintain its seven person, in-house team decided to the fund, which Engh said provides an advantage over other capital providers as they have industry experience and a track record of executing on deals as competition in the space intensifies.
Blue Ocean still intends to invest cyclically to decrease risk, moving in sectors near the bottom of the cycle.
IPO unlikely
One thing the fund would likely not do again is an attempt at a public listing, Blue Ocean said.
In September 2018, Blue Ocean explored a $250m initial public offering in London, hoping to sell 250m shares at $1 apiece.
The next month, it announced the effort had been "postponed" due to a "challenging background" despite investor interest.
On Monday, Engh said the company was not satisfied with the pricing and that the IPO effort was simply another "tool in the toolbox" for Blue Ocean to raise capital.
"It wasn't something that was important to the fund overall due to the limited amount of capital involved as compared to the size of the overall fund," he said.
"That's when we decided to back off when things started to change for the worse with substantial volatility [in public markets] toward the end of 2018."
He added that Blue Ocean would be winding up another fundraising effort in the coming months.
