With the ring of a bell on a warm spring morning at the corner of Wall and Broad streets, shipping cracked the $10bn line in combined market capitalisation for owners exclusively trading product tankers on the New York Stock Exchange this week.
It was chief executive Mikael Skov of Hafnia wielding the gavel and thereby expanding to New York an existing Oslo listing worth the equivalent of some $3.6bn in share value.
This adds to pure plays such as Scorpio Tankers ($3.66bn), Torm ($3.2bn) and Ardmore Shipping ($653m) as choices for investors who think the multi-year rally in clean products rates still has some room to run.
It’s quite a different picture from that window between 2010 and 2013 when Scorpio was the only game in town.
That was until Ardmore made its own modest debut with a June 2013 IPO that was not exactly embraced by the incumbent, unless a sharp elbow to the ribs is one’s idea of a warm hug.
By now it’s the stuff of legend in New York ship finance circles how Ardmore’s $140m IPO was firebombed by Scorpio and president Robert Bugbee with a simultaneous $190m follow-on equity raise that made the Irish company’s efforts more complicated, if still ultimately successful.
But there were no shenanigans this week when a much bigger rival than Ardmore came calling on US investors, albeit with no new attempt to sell shares.
Instead, it was all peace, love and understanding from Bugbee and the Scorpio camp, continuing the detente that surfaced when the Monaco-based group revealed an investment stake in both Ardmore and Hafnia in July 2022 as a power statement on the clean market.
“I don’t view it as competition, at least as far as the public equity markets are concerned,” Bugbee told us after Hafnia’s bell-ringing ceremony.
“It’s like being on a team. We’re on the New York-listed team of shipping companies, and we can break that down further into a tanker team. It’s fantastic to have another first-class performing player on that team.”
Bugbee had more kind words for Skov, a man whose career has been intertwined with his own, at least since Skov’s days as an executive with Torm. In 2007, Torm joined Teekay Shipping in buying the former OMI Corp from Bugbee and chief executive Craig H Stevenson Jr for $2.2bn.
Their paths would cross again in January 2022 as Scorpio was still trying to shed financial liquidity concerns. It sold its entire stable of 12 LR1s to Hafnia for $414m — thus all but silencing the alarm bells that had been set off by some equity analysts at the time while boosting Hafnia’s already huge presence.
“I consider Michael Skov not only a great teammate, I also consider him a great friend. I welcome him to New York,” Bugbee said.
The Scorpio president also observed that as nice as it sounds to have $10bn worth of product tanker shares trading in New York, it’s still not a huge number in relative terms and there are plenty of investors to go around.
“Not only is New York big enough for three $3bn to $4bn product tanker companies, the market is big enough for every single listed shipping company and many more — it’s huge,” Bugbee said.
The size of that market certainly has been on Skov’s mind as he told us after his turn on the balcony of the world’s most famous trading floor.
Hafnia has investigated a New York listing since 2015, when it came to the US to explore options.
“We feel that when you have sufficient scale in shipping, you really should have a presence in the New York Stock Exchange,” Skov said.
“There’s a huge investor base active in shipping now, and it makes sense to have a US dollar price on your stock rather than kroner alone.”
Liquidity is relative
In the near term, that liquidity is not likely to approach that of Scorpio, which trades an average of 1.2m shares per day and a recent daily dollar volume approaching $83m.
Much in the same way that Torm’s liquidity is limited by having one major shareholder — private equity’s Oaktree Capital Management controls 55% — Hafnia’s base is dominated by Andreas Sohmen-Pao’s BW Group at 43%. But that is lower after BW sold 5% of shares ahead of Hafnia’s New York listing.
Hafnia may also be pursuing a somewhat different shareholding base, as it recently upgraded its quarterly dividend payout to 80% of net income from 70%.
Scorpio, in contrast, has gone out of its way to throw cold water on hopes for a large special or regular dividend, instead favouring stock buybacks.
Hafnia, however, is not counting out interest from the buy-and-hold US institutional investors. In fact, it’s a group he specifically mentioned in this week’s interview.
“We’re hoping to attract some of the long-only funds in the US — we are getting some interest already,” Skov said.
Whatever Hafnia sees in the US market, it’s far from alone in Oslo. Two more BW Group-backed companies — Cadeler in the offshore wind sector and BW LPG in gas — also have targeted US listings, as well as companies like Cool Co in LNG, Himalaya Shipping in dry bulk and Okeanis Eco Tankers.
Even an inclusive and friendly Bugbee could not quite resist having some fun with the trend.
“Have you seen the Bob Marley film?” he asked. “When I hear the song ‘Exodus,’ I can’t help thinking of all the companies and people moving out of Scandinavia. ‘Exodus, movement of Scandi people!’”
