So, you thought shipowner consolidation was on hiatus for a while after an unusually busy spell in 2021? Maybe think again. Jefferies shipping investment banker Doug Mavrinac told a financial panel on Tuesday that he is working on three prospective merger-and-acquisition deals after being in the middle of two of the biggest combinations of 2021. Mavrinac was a panelist at the 28th annual shipping commerce by the Hellenic American and Norwegian American chambers of commerce, held virtually this year because of Covid-19 protocols. “Last year we were involved in three different M&A transactions. Two were completed and one did not reach the finish line,” Mavrinac told his audience.

He said there’s another three that the bank is actively engaged in. “And there is some diversification quality in those assignments,” Mavrinac said, referring to the idea of creating a shipowner with vessels in multiple operating sectors. The Jefferies veteran did not identify any of the companies in his current mandates, but details of the two completed 2021 deals are well known. Jefferies had a hand in International Seaways’s all-shares $416m acquisition of Diamond S Shipping in the tanker sector, and also worked on Navios Maritime Partners’ takeover of tanker subsidiary Navios Maritime Acquisition later in the year.

While he did not identify those involved in the deal that got away, Mavrinac said it fell victim to one of the many things that can go wrong with a consolidation attempt: a lack of trust. There was little chance for a trust breakdown in the Navios combination given that founder Evangeliki Frangou was the principal on both sides of the transaction. Jefferies represented Navios Partners in the deal. “Even if you overcome social issues, if there’s a trust breakdown between parties, there’s nothing that can be done to salvage that transaction. We literally saw a deal fall apart in the second half of last year because trust was broken,” Mavrinac said.

Navios Partners chief financial officer George Achniotis spoke on what his company views as the virtues of the deal, particularly the points of scale and fleet diversity. Combined with an earlier acquisition of another subsidiary, Navios Maritime Containers, Navios Partners now has a presence in bulkers, boxships and tankers. “For us, the rationale was compelling,” Achniotis said. “Over the past few years, we have seen extreme volatility in all sectors. We have seen the sectors act counter-cyclically. By diversifying, you create a way to smooth out that volatility. It can give you better capital allocation and more predictable returns to shareholders. It’s a larger diversified platform.”

Another panelist who knows quite a bit about consolidation was Star Bulk Carriers president Hamish Norton, who once held Mavrinac’s current job as Jefferies’ shipping banker. Star has acquired about half of its industry-largest fleet within the past three years through company acquisitions, he noted, all using company stock. “The sellers wanted to take our shares,” Norton said. “In order to do a deal like that, you need to have a share that people want.” Star has also benefitted by being willing to place the principals of acquired companies on its board, with Norwegian shipowner Arne Blystad and Italian Raffaele Zagari both currently holding seats, he said.