A clear renewables story is helping shipping shares fly off the shelves in a buoyant initial public offering arena in Oslo.
Car carrier owner Hoegh Autoliners and offshore wind vessel player Edda Wind look set to raise a little over $300m combined from their IPOs this month.
Both transactions were effectively more than sold out before the book-building even launched, with the companies announcing to the Oslo bourse that they were oversubscribed 15 minutes after official opening times.
Clarksons Platou Securities chief executive Erik Helberg told TradeWinds that shipping markets have been strong this year and continue to look very robust, supported by historically low orderbooks.
"This has led to elevated returns for investors buying into both dry bulk and container shipping stocks," he said.
"The car carrier market is no exception in this regard, and coupled with amongst others the electrification push from car manufacturers, we are seeing a substantial increase in freight rates and a corresponding strong upward movement in the share price for the likes of Wallenius Wilhelmsen."
As a result, when investors have been offered the opportunity to be part of IPO initiatives, Helberg argues that the response has been positive.
The investment banker noted that Hoegh Autoliners is seeing very strong demand on its upsized deal.
Family support important
"Attractive valuation, strong support from the Hoegh family and a green newbuilding programme have all fuelled investor attention," Helberg said.
"We see a continuous strong general investor interest in the green transition/renewables, especially for mature companies with proven business models."
He believes Edda Wind has received particularly strong attention because of the transparent future cash flow stream driven by multiple long-term contracts with high-quality clients such as Vestas, Orsted and SSE.
The company will go straight on to the main Oslo Stock Exchange board, while Hoegh Autoliners is heading for the Euronext Growth list, with ambitions to move up within six months or a year.
The Edda Wind IPO is the second round of successful equity financing that Clarksons Platou Securities has helped secure for the company.
The investment bank worked on the buy-in of the Wilhelmsen group as a 50:50 partner with founder Ostensjo Rederi in March this year.
Investor base increasing
"Clarksons has experienced similar interest from a gradually increasing international investor base in transactions involving players in the offshore wind value chain including Eneti, Integrated Wind Services, Seaway 7 and Windcat," Helberg said.
But Hoegh Autoliners' rival Gram Car Carriers pulled a $110m IPO in Oslo in November, saying interest from institutional investors in the UK and US was not strong enough.
Helberg said: "Gram saw solid investor demand, but decided to put their initiative on hold due to lower penetration with larger institutional investors."
"As the year gets closer to the end, larger investors typically become increasingly focused on higher trading liquidity," he said.
Hoegh Autoliners' IPO is being carried out to fund the equity portion of four newbuildings on order in China.
The first 9,100-ceu Aurora-class ships, the biggest car carriers in the world, are being built at China Merchants Heavy Industry for delivery in 2024 and 2025.
Eight options for the multi-fuel, ammonia-ready units are attached.
