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Major German investor wants to buy up in MPP after banks' exit

German investment company Dr. Peters Group aims to close the gaps left by banks in the hard-pressed multipurpose sector and is preparing itself for large acquisitions in MPP and two other segments. Especially larger fleets with a particular type of ownership are interesting to the firm.

Photo: Dr. Peters Group

NEW YORK

A German investor with a large shipping portfolio is preparing to enter a corner of the industry that has been all but abandoned by the banks.

From its headquarters in Dortmund, Dr. Peters Group invests in physical assets and already owns an expensive fleet with an emphasis on tankers and container ships. The company finances a total of 88 ships valued at USD 4.7 billion, itself operating slightly more than one-third of its fleet.

However, the group is looking to grow its business in the coming years, and the company is therefore searching for new opportunities for buying ships from owners that want to reduce their exposure to shipping.

One of several areas in which Dr. Peters Group is looking to buy is the strained market for project cargo, where carriers have been struggling for some time.

"We currently see growth opportunities in select areas of the maritime industry, in particular MPPs and crude tankers. In the aftermath of the financial crisis, availability of debt finance continues to be restricted and this generates attractive tactical and longer term opportunities to deploy equity and structured equity in the sector," CEO Anselm Gehling tells ShippingWatch.

Looking at family-owned fleets

The specially built multipurpose and heavy-lift ships are able to transport a long list of unconventional cargo types such as building materials in wood, steel or preconstructed machine components.

The MPP market is currently dominated by Zeaborn, Intermarine, BSC Chartering, AAL and Thorco Projects.

The last couple of years rates have been low and competition from other sectors fierce. This has led to situation in which many carriers have been forced to offload their ships to shipping banks in Germany and Holland, while many of the remaining shipowners are also trying to move on.

In the aftermath of the financial crisis, availably of debt finance continues to be restricted and this generates attractive tactical and longer term opportunities to deploy equity and structured equity in the sector"

Anselm Gehling, CEO, Dr. Peters Group

Last year, sources in the project cargo market told ShippingWatch that the banks had acquired over 100 under-performing ships in order to place them in the management of financially stable operators.

Things could be looking up though. According to Drewry, it is possible that the bottom has been reached for the multipurpose ships, which project growth rates at 2-3 percent.

The Dr. Peters group is therefore seeking to buy a batch of MPPs, which is the primary ship type of interest, followed by VLCCs and perhaps dry bulk vessels.

"We are seeing some opportunities in MPPs, crude tankers, and perhaps in dry bulk. We believe these sectors offer the most attractive asset values and strongest upside in earnings. Dr. Peters Group is working on enlarging our fleet via entities with larger portfolios compared with asset-backed KGs that often include just one or two ships. The strategic focus is on targeting institutional clients and family businesses," says Gehling.

Also looking in Scandinavia

Dr. Peters Group has invested in ships since 1975 and also owns commercial airliners as well as real estate.

The group's point of departure for business is Germany, in which the shipping industry has gone through extensive changes after the financial crisis, where several of the so-called KG funds, but also shipping companies, have gone defunct. However, the group's geographic interest areas extend well beyond Germany.

As long as an acquisition opportunity involves a larger portfolio and not merely a few ships, the group would be interested in taking a closer look.

"We have no specific geographical preferences. In principle, we will consider deals with investors from all over the world, for example from countries such as the UK, USA, the Far East and Scandinavian countries," says Gehling, stressing that Dr. Peters Group – unlike many banks – see potential in shipping.

"We consider shipping a very attractive real asset class, particularly at the moment. An improving freight rate environment for many vessel types means that attractive income returns are available, together with the opportunity to enter the market at a time when asset values are at the low end of the cycle," says Gehling to ShippingWatch.

English Edit: Daniel Frank Christensen

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