Clarksons Securities is tipping the “eagerly anticipated” initial public offering (IPO) of Stolt Tankers to take place in the second half of this year.
The spin-off of Oslo-listed Stolt-Nielsen’s chemical tanker fleet has been in the works since 2017.
But now there is serious momentum towards a deal, with analysts believing the final steps are now being taken.
“We believe it is likely to take place in the second half of 2023,” said Frode Morkedal and Even Kolsgaard.
The Norwegian group has previously set three conditions for an IPO: a strong chemical tanker market; a favourable financial market; and suitable debt levels within various business units.
The first condition is undoubtedly fulfilled, according to Clarksons Securities.
“Within six months, most of the contract of affreightment (COA) portfolio should be secured at robust rates,” Morkedal and Kolsgaard said.
“The second condition is more dependent on market conditions, but considering the current high demand for shipping and Stolt Tankers’ profile, we anticipate that the demand for the IPO will be substantial regardless,” they added.
The remaining challenge lies in the company’s debt.
Although absolute debt levels are no longer excessive, with estimated gross loan-to-value ratios for Stolt Tankers, Stolt Terminals, and Stolt Containers at 55%, 46%, and 42% respectively, Stolt-Nielsen has two group-level bonds that warrant attention, Clarksons Securities argues.
Plausible time frame
There is $132m outstanding on an issue due later this year and $141.5m left of another maturing in the first quarter of 2024.
“The bond maturing in June is anticipated to be repaid using available liquidity, likely addressing the issue. As a result, the second half of the year seems like a plausible time frame for the IPO, which would also coincide with a seasonally strong market,” the analysts said.
The group’s total debt amounts to $2.13bn, with $888m associated with Stolt Tankers.
Management has previously indicated that half of the total bond value is likely to be allocated to Stolt Tankers with an IPO.
Including the remaining capex of $74m, debt and capex for Stolt Tankers totals $1.1bn.
Given the fleet's age, the investment banks believe a five-times enterprise value to Ebitda ratio is reasonable.
Using the $500m run-rate Ebitda as of the first quarter this year, the enterprise value is $2.5bn for Stolt Tankers, it calculates.
After subtracting debt, there is a $1.4bn equity value.
VesselsValue has a valuation of $1.58bn on the 57 owned ships it lists for the company, although a total of more than 160 are operated through various other ventures.
Stolt-Nielsen has said an IPO is constantly under review.
