TSAKOS Group is partnering Swiss Capital Alternative Investments in readying a large investment in the dry bulk carrier market as a number of funds appear to have concluded the time for buying bulkers has finally arrived. The Greek owner may put in as much as 20% of the equity of up to $500m that is being earmarked for spending in the sector.

Swiss Capital has been ready to launch its Floating Steel Fund, as the fund is called, since at least 2015 if not further back. It is unclear whether Tsakos has been in the frame since the beginning. At that time, Swiss Capital said that it was mindful of the attractions of “real asset strategies” in periods of potential inflation.

The fund aimed to acquire “a blend of quality secondhand dry bulk carriers at the bottom of the current shipping cycle”. It reckoned it could operate and trade the vessels for a yield of 6%-8%, and targeted disposing of the ships at a future point in the cycle for “substantial capital appreciation”.

Lloyd’s List has been told that the project is essentially unchanged despite a recent acquisition of Swiss Capital Alternative Investment by StepStone, a New York-based markets firm with about $28bn of assets under management.

The focus will be squarely on modern panamax, kamsarmax, post-panamax and capesize bulk carriers built in South Korea or Japan. The sponsors aim to open the fund to outside investors but keep debt to a minimum; they are targeting being in business by the second quarter of this year.

Even without any leverage, at present market prices the fund could conceivably buy up to about 20 capes if it spends up to its envisaged investment capacity. The fund managers have set a maturity period of between six and eight years to cash in on the investment. “They seem to have taken on board the reality that it may take a while for the market and values to recover instead of expecting to make a killing overnight, which you sometimes see with private equity,” said an independent industry source familiar with the project. “The concern among owners will be that with fund money coming into the industry again it will push up prices. But there are not many modern secondhand ships to be had, so you also hope that does not push people towards shipyards.”

The Swiss Capital deal, however, appears specifically targeted at secondhand tonnage. In addition, the involvement of Nikolas Tsakos, the current chairman of Intertanko, may also reassure on that score.
Although the Greek group has built more than 100 new ships in its 45-year history, they have mostly been for long-term charter. In the last three years Mr Tsakos has, in his Intertanko role, been outspoken against the damage that speculative newbuildings can do to the market. He is seen as likely to sing from the same song sheet for the dry sector. As well as the large publicly-listed tanker fleet under Tsakos Energy Navigation, the Tsakos Group privately owns and operates a mixed fleet of vessels including containerships and bulkers.

Bulker prices have already risen from the lows of last year — substantially so in the case of panamaxes — and with predictions of firming values ahead, it would be no surprise if some trigger fingers are getting itchy. Besides the Floating Steel Fund, Lloyd’s List has been made aware of another possible fund of a magnitude of $400m to $500m said to be in the pipeline, though details are scant. Another unidentified group is said to be at work on an initial public offering to buy dry bulk assets.

According to Anthony Argyropoulos, managing director of Seaborne Capital Advisors, which provides a range of services to shipping companies related to public and private financing, a dry bulk initial public offering is currently “closer to the realms of possibility than it was and it would be even closer if the market does rebound more in 2017. In my personal view, right now it will still be very challenging,” he said. “To say you can do a deal right now and hope it will price well is a bit premature, I think.”

Investors last October were offered the chance to climb on board the Saverys family-backed blank cheque company Hunter Maritime Acquisition, which duly raised $150m. Although open in scope, Hunter made clear that the dry bulk sector was seen as “a favourable area” for its attention. Brokers have recently reported that it has already agreed the acquisition of four newcastlemax-size bulkers from Chinese sellers, though this remains unconfirmed.