It’s not a great time for consolidation in the broader market, but shipping is keeping merger-and-acquisition bankers busy amid more favorable conditions. That was the take from veteran M&A banker Mark Friedman of Evercore in remarks to the annual Marine Money ship finance forum in New York on Thursday. The broader market has seen a strong correlation over the past 20 years between overall market strength and deal flows, so it is not a great surprise that deals are slumping in 2022 with the S&P 500 index down about 17% on the year and Nasdaq falling more than 20%, Friedman said.

Global M&A deals are at $1.85bn through 31 October, well down on the $3.7bn seen in 2021 and more on pace with the $2.17bn seen in the Covid-hit year of 2020. But shipping equities have outperformed the market. Tanker stocks are up an average 235% on the year, bulkers 121% and container owners 61%. Against that backdrop, there have been at least eight significant M&A shipping deals in the last two years, with Evercore involved in half of them, Friedman said. “Shipping historically sees very little activity happening at the bottom of a cycle and not a lot at the very top,” Friedman said. “You tend to see it when the markets are improving, or when there is still enough juice left in an existing up market.” Among the biggest recent shipping deals have been a trio of take-private transactions: Seaspan parent Atlas Corp being acquired this month by insider Poseidon Acquisition Corp, Teekay LNG by Stonepeak in October 2021, and LNG player GasLog by private equity’s Black Rock in February 2021. More conventional consolidation has come through International Seaways’ March 2021 acquisition of Diamond S Shipping, Diana Shipping’s August buy of private Sea Trade Holdings, and two pending deals: Frontline’s combination with fellow tanker giant Euronav and Taylor Maritime’s tender for shares of Grindrod Shipping in dry bulk.

“Some of these are big transactions by shipping standards,” Friedman said. A transaction like Diana’s $330m strike for nine Sea Trade ultramaxes demonstrates the public company’s ability to approach fleet renewal at a time when there is little activity otherwise in the newbuilding market, Friedman said. “In tankers and dry bulk, there’s almost a nil orderbook,” Friedman said. “If you wanted to expand your scope in the past, newbuildings were the normal channel of growth. Right now, that’s not available.” Friedman told TradeWinds following his remarks that he thinks the shipping consolidation trend has legs. “I believe so,” he said. “Strong CEO confidence, strong markets and share prices portend for a likely active M&A period for shipping companies.”