Norway’s NRP Maritime Asset Management (MAM) has explained how it managed to get its new ship finance fund off the ground during a pandemic — and why it has ruled out funding for ships carrying fossil fuels.
The company has this week closed $110m of a planned $200m for its Premium Maritime Credit Fund in Luxembourg.
MAM bosses first said in November 2019 that it was planning the fund, but global events quickly intervened.
Managing partner Nicolai Heidenreich told TradeWinds that the fundraising process originally began in March 2020.
The company was all ready to go when Europe for all practical purposes shut down, he added.
“Although we are a familiar name in Norway, we did not have any reputation abroad, especially among the institutions we were now targeting, and as a new manager, raising capital for a shipping product, although credit, was not easy,” Heidenreich explains.
On hold for a year
“When the world shut down we did not even get the chance to pitch our product so we put the process more or less on hold and started working again first quarter 2021,” he said.
The fund will target secondhand purchases and refinancings, but some vessel types will not be covered based on environmental criteria.
“We have taken the approach to exclude any ships carrying fossil fuels so will focus on the smaller to mid-size bulkers and container feeders and other industrial carriers,” the managing partner said.
There are no age restrictions on the vessels it will finance.
MAM is looking to advance as much as 60% as first-lien debt.
“We are able to tailor any transaction to suit the needs of the clients, eg on repayment profile, tenor etc,” the boss said.
Tranches of up to $10m
“Typically, we will look to lend out tranches of $5m to $10m, a size range being dropped by most credit providers,” he added.
Heidenreich said newbuildings will be very difficult to finance, given the size of the fund for now.
But short-term “take-out” financing from shipyards could be a possibility, he added.
“Both refinancings and secondhand are a naturally good fit. One of our main competitive advantages will be timing and that we focus on being document-light. Of course, with stringent KYC [know your customer] requirements,” Heidenreich said.
The aim is to differentiate the fund on speed, so MAM has not wanted to market the product before the cash was in place.
A loan in a week
“Now that we have this, we aim to be able to give a firm credit-approved term sheet within a week,” the managing partner said.
MAM only has a credit committee of two people, so can act quickly.
The total team of three in Oslo, which comes in addition to seasoned fund executive Claes Johan Gejer as a fund board member in Luxembourg, will be expanded as soon as possible.
MAM is already looking at a new hire before the summer.
“As demand for loans is a timing issue and since we just finalised the first closing, our pipeline is very manageable at the moment. But we expect this to increase,” Heidenreich said.
Other funds merged
The company previously had three equity funds that were merged into one during the second quarter of last year.
“We spent a lot of time managing our equity investments in 2020 when everything looked uncertain. Luckily we managed to keep our cool when the shipping markets bottomed during the summer and entered the rebound with a fully invested portfolio,” the manager partner explained.
“The merger was a great success, enabling us to optimise one large portfolio rather than three small, and since the merger the fund is up more than 50% in nine months,” he added.
Luxembourg was chosen for the new fund because it has a well-established and reputable platform.
“As most of our investors and clients were thought to be European-based, we felt Luxembourg was appropriate with a good reputation,” Heidenreich revealed.
