UK-based Tufton Oceanic has launched a $150m IPO on the London Stock Exchange in a play on second-hand vessels across market segments.
Tufton is moving at a time when others have geared up fundraisers in the long-distressed dry-bulk market, but it does not specify that segment as a particular focus.
Shares would trade on the Specialist Fund Segment of the LSE, according to a regulatory filing made today.
Attractive time?
“Tufton believes there is currently an attractive opportunity in shipping to buy assets at a significant discount to their depreciated replacement cost and lock in long term employment producing mid-teen cash yields,” said Andrew Hampson, head of asset backed investments, in the filing.
“This is a strategy we've been following with success for a the last couple of years and currently see limited competition due to the lack of capital currently being invested in shipping.”
Tufton officials decline further comment.
The veteran shipping investor said it is looking for a “diversified portfolio of secondhand commercial sea-going spread across the core segments of shipping.”
Tufton currently controls 37 vessels with an aggregate value of $369m, according to VesselsValue.
Its biggest segment is bulkers with 13, followed by boxships and tankers with nine each, five offshore support vessels (OSVs) and one specialised cargo carrier.
The placement is expected to close end-March and the shares to begin trading on 3 April.
Tufton has a target distribution yield of 7% for the calendar year 2018 and 5% in the first 12 months, the filing states.
It has a target internal rate of return (IRR) of 12% per year on a net asset value (NAV) basis.
Tufton is touting its track record, saying since fourth-quarter 2014 it has invested $840m in 44 vessel acquisitions for vehicles managed or advised by Tufton.
13.8% annual yield
Investments in 2015 and 2016 had net unlevered cash yields of 13.8% per year, it said. IRR on secondhand investments through September 2016 has been 14.8%.
The IPO is being waged under the name Tufton Oceanic Assets Limited. Tufton Oceanic Ltd has been appointed investment manager.
Cenkos Securities and Hudnall Capital have been appointed joint placing agents and financial advisors.
