Many parties, whether already in or looking to enter shipping, are analysing the point of the cycle the industry is presently in, and are therefore looking at creating structures for various types of vessels to seek to benefit from future upsides. Many are, however, hesitating to go ahead either due to previous bad experiences or by seeing how things have backfired for others. We understand this business from years of practical experience and we know how these risks can be mitigated and how to work with the various players in the market to create a sound business with a clear risk profile.
Taking the role in a vessel owning SPV, traditionally handled by the senior management in a ship owning entity.
- This service is provided by senior managers with a blend of commercial and technical skill-sets as well as in depth financial understanding. The asset managers are independent and serve as the owner’s representatives, providing a direct link to the parties with an economical interest in the vessel. Furthermore, the asset managers optimize the overall operation of the vessel and the coordination between day to day technical and commercial managers of the vessel.
Main advantages of using an independent asset manager:
- Flexibility to appoint the best suited technical and commercial manager for the specific type of vessel, who can optimise the financial returns.
- No conflict of interest, when pursuing the owner’s interest.
Looking after the owner’s interest in connection with the commercial contracts for the vessel, we act as the in-house chartering manager and S&P team.
- Employment: Our team has comprehensive experience in identifying the best suited commercial management structure for the vessel. This can be via a Bareboat, Time Charter, Pool or Commercial management agreement with a leading player in the segment. We have experience in negotiating individual contracts and ensuring the overall performance during the term of the charter contracts.
- Sale & Purchase: We have ample experience in:
- handling sale and purchase transactions and have a range of direct contacts to buyers and very good relationships with the leading S&P brokers.
- the crucial aspect of coordinating the successful delivery of the vessel concerned to a new buyer without claim of deduction in price.
When creating a structure for a successful vessel owning company, there are a number of both strategic and operational issues that need to be considered already in the initial phase. These include among others:
- Earning potential: How does the available market data apply to the specific vessel in practice? What is the optimal employment strategy and what are the cash flow risks of this?
- Cost picture: What is the risk for cost overruns on the specific vessel?
- Day to day management of the vessel: Does the optimal solution require a 3rd party technical manager or an integrated vessel owner/technical manager? Similarly does it require a 3rd party commercial operator or an integrated vessel owner/commercial manager?
- Responsibilities: Who should oversee and be responsible for the overall performance of the owning company?
- Financing structure: Which model of financing creates the optimal risk/reward structure?
- Exit: What flexibility is required for an early exit?
Our team is very experienced in shedding light on these and many other questions from a practical perspective, which is key to creating a well functioning vessel owning entity, giving it the best chances for success.
Creating ownership structures, which are arms length owners of vessels. We are in this respect for instance able to provide:
Flexible structures to be suited to the individual client’s requirements and not constrained by financial and balance sheet issues.
- Clear transparent structures with a named beneficial owner with whom the ownership risks lies.
Our approach is that we provide a service for a fee and that we do not have ambitions to create a large ship owning company. This also means that while we are able to source capital for Ownership structures (i.e. working capital), our input will be based on a balanced risk/reward evaluation.
We also offer our services on an advisory/consultancy basis where we do not lead the project, but only assist with specific tasks as may be required. These include, but are not limited to:
- Earnings potential: We can assist in evaluating the viability of an existing or new business, and advise on pros and cons of various employment strategies.
- Costs: We can assist with cost evaluation of existing and new projects and advise on where improvements can be made.
- S&P: We can assist in the negotiation of the sale and purchase of individual vessels and advise on smooth delivery, optimizing the overall proceeds of a sale.
We will be happy to discuss how our past experience can assist in going forward.