ShippingWatch

Euronav CEO: Shipping enjoys the climb

Paddy Rodgers, CEO of listed Belgian tanker giant Euronav, is the star of this year's Marine Money conference in New York. ShippingWatch was present when he mapped out the opportunities for the future of international shipping: "The investors are buying volatility."

NEW YORK

All eyes are on him. Indeed, he is one of the major stars at the shipping conference Marine Money, and the reason is not least evident in the notably successful IPO of Euronav in New York. Back in mid-January, when Euronav went public on the NYSE, the company had a market value of about USD 1.5 billion. Today, that value has grown to over USD 2.2 billion.

His name is Paddy Rodgers, CEO of the Belgian tanker carrier Euronav.

The focus of the conference can be boiled down to two words: Shipping and capital.

Euronav looks like analysts' tanker favorite in 2015

"One of the hardest things in shipping is noticing changes. When things change, it is often hard to tell and it is difficult to understand what it means. I have never thought about it as much as when I saw a picture of myself the other day and thought, who is that old man," says Paddy Rodgers, CEO of Euronav, and continues:

"It's the volatility that our investors would like to purchase and we often get that wrong. We often think that investors don't want volatility but they do. If you look at the returns from shipping over time, they're fantastic. We feel that it's a ride on a roller coaster and it is. The only difference between the shipping industry and a roller coaster is that in shipping, the fun part is the climb - not the fall."

Challenges of an IPO

Paddy Rodgers explains how, as the head of Euronav, he has been through almost everything possible as a listed company.

Liquidity is the king pin. Liquidity is key.

Paddy Rogers

 

"We have been through it all. We have learned that there are challenges with going public. One of them is that you can get distracted. For instance, if you get the wrong lawyers, the wrong accountants or so on. This can be really expensive. If you get the right people on the other hand, then it's no problem, because then you have an organization which is capable of meeting all demands. It's not a trick. It's about being authentic and transparent," says Paddy Rodgers, before making a very clear plea to his colleagues in the industry:

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"There is one way to make this industry particularly cyclical. You can do this by building new vessels, because that leads to lower freight rates. For instance, you can buy shares in a listed company and let others control that sort of thing. This is our business - this is our thing. Your thing is making money, having liquidity and being a shipowner by owning shares. The excitement of volatility will be there - don't worry."

Employees are key

At the same time, he explains that it has been difficult to be listed, but that it has not been challenging.

"It has been of very great value. First of all, because I have found out what honor it is to be able to present on behalf of the people employed by the company. It makes me extremely proud that I can speak for them. The average employment at our company is 17 years and I can't emphasize enough how important that is," says the Euronav CEO.

"Many people have told me that the market is stupid and does not understand the business. What I can say to that, is that I have met the most intelligent people, who have asked really good and interesting questions, although they might not have had the greatest knowledge about the industry. They have tested us and have made us think about the business as well as made sure that we stay honest the whole way through," he said in regards to the many road shows etc. which took place in relation to the IPO on the New York Stock Exchange.

You should come up to me and start by asking, how we can get back to delivering a 9 percent return on the invested capital.

Paddy Rogers

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"It's easy to become a shipowner but it is hard to stop being one. I came to Euronav in 1995, and here I am 20 years later, still trying to escape," says Paddy Rodgers to the amusement of the hundreds of attentive industry players in the audience.

Liquidity is key

"As an investor you can enter and exit the industry with investments in listed companies - as long as there is a management which will do its best to create liquidity for you. Liquidity is the king pin. Liquidity is key. The major funds are not in the shipping industry, because it is still a small sector with a private equity concept over it. It's our job to make sure that we work harder to gain recognition from the industry. We represent an industry which has an amazing story to tell and we represent an industry which needs liquidity," says Paddy Rodgers and adds:

"It would be horrible if I was good friends with the customers but a stranger to my shareholders. I want a satisfied customer, not a happy customer. I want a happy shareholder."

A plea to the rivals

Although the tone is mostly positive from the articulate CEO, he also makes what you can call a friendly plea to some of his colleagues in the industry, which according to Paddy Rodgers, apparently have not grasped how to create a stronger shipping industry.

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"The worst thing that can happen to you, and believe me, it happened to me, is a conversation where people tell me that they are outselling my pool by USD 500, at a time where you can maybe just barely cover the maintenance costs of the vessels. Congratulations. What a great conversation. We're both losing the shirts off our backs and the only thing that matters to you, is that you're outperforming me by a margin. You should go home at night and consider the fact that you're destroying the family fortune. it's a ridiculous conversation. You should come up to me and start by asking, how we can get back to delivering a 9 percent return on the invested capital. That is what we should focus on," says Paddy Rodgers before he concludes with an entirely different, but pivotal topic.

Gener8 and Frontline

"At Euronav, we have done what's possible for consolidation. First of all, we have acquired new vessels but we have not ordered completely new ones. We purchased other people's vessels into a listed company just like we back on the 6th of November entered into an agreement with Frontline. Consolidation is important because it's about becoming big enough to seriously attract capital and be able to reward the capital," says Paddy Rodgers.

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"The sector must grow and for that reason, I am more than happy that Gener8 will soon go public and I'm really pleased to see that Frontline is rising like a Phoenix, on its way to becoming the company that it once was," he says.

In a prospect which was released on the 15th of June 2015 ahead of Gener8's upcoming IPO, the company announced that they expected to sell USD 15 million shares on the stock exchange with a share price of between USD 17 and 19 a piece. With the lowest price, this means that Gener8 could get USD 255 million from the IPO, while the highest price would mean USD 285 million for the company.

Gener8 has equity funds including Oaktree Capital in its circle of owners and the carrier has a large tanker fleet which includes 21 VLCC newbuildings on their way.

The acquisition of Maersk's VLCC fleet

Euronav and Paddy Rodgers were praised last year by shipping analysts for an extraordinarily good deal, when the company last January completed the acquisition of Maersk Tankers' VLCC fleet of in all 15 vessels.

The acquisition of the 15 super tankers from Maersk ranked as the best deal among a total of 30, which were completed in international shipping since June 2012.

Euronav finalizes acquisition of four VLCCs

Euronav begins 2015 with significant growth

Oaktree behind new US-based VLCC giant

Maersk VLCC purchase named deal of the year

Gener8 Maritime headed for New York IPO

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