Shipping asset prices, especially in certain market segments such as crude oil tankers, have started reaching tempting levels. Institutional investors, and primarily private equity funds are known to be looking heavily into the sector for a while. After all, if astute independent ship owners can time the cycle and make a killing by trading assets, why institutional investors with their access to massive market data and shiploads of money to be deployed could not play the same game as well as operating ship owners?
While on paper it seems that asset play in shipping could be a game open to all, all with serious money to invest in that is, from a strategical and logistical point of view, it is not as easy as it seems to successfully play the game.
First, there is the small logistical point of vessel acquisition. Usually vessels that are discreetly looking for a new home, and there are extenuating circumstances for their sale, are not patently marketed in the market. A short list of potential buyers, usually deep pocketed, highly reputable and fast on their feet operating shipowners get to see such assets first. Given their profound knowledge of the market and their already in-place and in-house expertise, they already know the 'stable' from where the vessels are coming, they are familiar with the vessel design and they can have their very own inspector on the vessel on short notice; thus, on short notice they have addressed all the concerns that every prudent buyer has in terms of information symmetry before acquiring the asset and consummating the transaction. Thus, in short notice, they have addressed all issues but the purchase money and the purchase price, but again, the purchase money were known to be there in the first place, and that's why they got to see the vessel ahead of the list of other potential buyers. So negotiating the purchase price is the only real outstanding parameter…
For a good deal, time and efficiency is of essence. If an institutional investor were to see the same transaction and at the same time, their analysts, and legal departments, and investment committees, and their outsourced shipping experts had to be as fast and smooth as a clipper ship to make good time to beat the private buyer. Based on the Captain's experience, usually investment committees need about a month to brew instant coffee, by which time, good deals are gone and bad deals are still in the market...
And then, again, assuming that an institutional, passive buyer has been decisive enough to act fast, what do they do first with a new acquisition? Definitely any vessel is a rapidly deteriorating asset, always exposed to rusting salt water, and technical management has to take over soon upon assumption of the new ownership. And, from a commercial point of view, the crucial issue of chartering and commercial management still remain outstanding. Just because a vessel was recently acquired by a 'master of the universe' fund (with all due respect for the misuse and abuse of the term), a phone call to the chartering department of an oil major company would not get past the reception. As much as oil companies care about financially stable vessel owners these days, commercial and technical vessel management excellence is the tanker 'add-on' tanker charterers always look for.
Despite the Captain's extensive interaction with institutional investors and funds, there is always the concern that shipping is best suited for ship owners who know the market, not academically brilliant necessarily, but mostly commercially, logistically and transactionally shrewd. Vessels are illiquid assets and peculiar beasts to be tamed, from the sail boat of the centuries past to the supertanker of the modern day, so their ownership and management is best left with the market experts. Institutional investors may be best suitable for investing in shipping liquid assets such as tradable equities and bonds, where their financial expertise and competence remains segregated from that of the shipping markets'. Or, possibly, institutional investors with serious and lasting interest in shipping assets perhaps should think as shipowners themselves and acquire their own in-house expertise by hiring shipping experts or joining forces with the right owners after doing their due diligence.
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