London-listed Taylor Maritime Investments (TMI) has become the biggest investor in Singapore bulker rival Grindrod Shipping as it sells its first ships. The Ed Buttery-led owner is spending $77.9m on a 22.6% stake acquired from a wholly owned subsidiary of Grindrod’s largest shareholder Remgro. The company has also bought a 2.2% position in the open market, giving it 24.8%.

Grindrod’s annual report from March shows South African investment group Remgro with a holding of 22.8%, and the next biggest shareholder as PSG Asset Management on 10.7%. Nasdaq and Johannesburg-listed Grindrod has “an attractive, modern fleet” of 25 predominantly Japanese-built geared dry bulk vessels, which are highly complementary to TMI’s portfolio, the shipowner said. The deal is being partly funded through the sale of two Chinese-built vessels for a combined $42.8m — an internal rate of return of 100%. Cash and an existing debt facility will also be used.

The Grindrod transaction at $18.00 per share is “attractive” in the light of the company’s prospects and represents an annualized dividend yield of 16%, TMI said. The stock closed at $15.26 in New York on Friday. The deal is consistent with TMI’s strategy of seeking growth opportunities to increase shareholder returns at a time when dry bulk market fundamentals remain strong with a historically low order book and a robust global demand outlook, the owner added. “The acquisition is also consistent with its policy of fleet renewal through the selective disposal of assets,” TMI said.

Chief executive Buttery said: “We believe the investment in Grindrod Shipping is an excellent opportunity where we know and respect the company which has a high-quality, young and complementary fleet. The acquisition will be internally funded by asset sales at premium valuations, cash on the balance sheet and prudent, short-term use of the company’s revolving credit facility,” he added. TMI, which listed in London in May, views Grindrod as a highly cash-generative business. “Our investment is expected to be accretive from both a capital and income perspective with no impact on our dividend policy, our potential to pay an extraordinary dividend nor on our ungeared long term capital structure,” Buttery said. The company revealed it consulted several shareholders about the deal. Supportive feedback led the board to go ahead. TMI will have 27 vessels after the unnamed ships leave the fleet.