Commercial and regulatory pressures mean that now is the right time for private equity investors to expand their involvement in the shipping services and technology sector, according to Moore Stephens.
Dr Adam Kent of London-based consultant Maritime Strategies International (MSI) told the recent Moore Stephens Opportunities in Shipping Services seminar in London that private equity should be looking to invest in multi-faceted companies with a good reputation, pricing power and specialist products. “Opportunities are to be found,” he says. “It’s a question of timing.”
Meanwhile, Alison Jarabo of maritime efficiency specialist Fathom Shipping told private equity investors at the Moore Stephens seminar that regulation and the need to control costs were the two main factors driving the growth of technology in the shipping industry. She emphasises, however, that: “Technology and innovation may abound but, without end-users able to access the finance to deploy, the market will fail.”
Jarabo identified scrubber technology, ballast water treatment systems and ship performance management systems as some of the main technology opportunities in the industry today. She cited unreliability of technology, lack of in-service history, and lack of acceptable clear parameters as some of the potential barriers to uptake by private equity investors, but also noted that the shipping industry excels at anticipating changes in regulations, at the timely implementation of R&D initiatives, and at the adoption of consistent and coherent regulation on a global basis.
Moore Stephens shipping partner Richard Greiner says: “Today’s shipping industry requires significant investment in technology and services to achieve compliance with environmental regulation and to maximise commercial performance. This represents a clear opportunity for private equity to invest in responsible shipping services providers with sound business plans.
“The shipping services market is currently attracting a lot of interest from private equity, not least because it is a highly fragmented sector with a wide range of business sizes. It is providing services to a tightly regulated industry in which a large number of developments are taking place. Shipping services providers who have developed the technology to meet these requirements need the financial resources to bring them to market. Similarly, end-users who have identified the technology solutions which are right for them need the funding to access and implement them.
“Private equity investors who have a firm grasp on the potential risks and rewards available in today’s shipping services sector are a good match for well-founded shipping services and technology providers who have a clearly identified market for their products, and for their customers. Indeed, it could be argued that recent developments have created something of a perfect storm to bring the two together.”
