When TW+ asked Scorpio Group president Robert Bugbee for his view on public shipping markets a decade hence, he liked the idea so much that he got to work on his own futuristic fantasy-scape. What part of this is deeply held belief, what part is cheeky fun, Bugbee’s not saying, except to note that all humour contains some elements of truth.
“Spring in Switzerland. It’s been four years since the Big Shipping Crash of 2029. Shipping markets and equity markets have been improving for a year, and I am looking forward to a non-deal roadshow.
There are meetings between company managements and institutional investors that are not tied to any specific offerings of securities. Many former Norwegian and UK funds will be here to meet in the Alps and later the desert and the East. We discuss old friends who did not make it out before the huge exit taxes.
The rest of the trip is Dubai, Mumbai, Singapore and Hong Kong, then back to the US. Norway and the UK are still nice places to visit but not for shipping capital markets.
The public companies are now giants compared to a decade ago. The big dividend payers and those who maintained high leverage to renew their old fleets at market tops before the crash were smashed just like every cycle before . They were either bought by stronger, bigger public companies or were forced to sell to cash-rich private shipowners.
The remaining leading companies across all sectors are much more like the leading companies in other industries, or like successful private owners. They are less leveraged, and where there is debt, they are more diversified.
Equity providers are not supplying funds to small-caps, start-ups or for speculative orders.
The reduction in demand for capital and services from shipping bankers, both commercial and equity, has resulted in fewer of them being here. But those that remain are doing well as a result of currently stronger markets and companies.
There is so much discipline today. Many think we as an industry have finally matured. But others like myself think shipping is setting the capital markets up for the biggest crash of all!”