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The crisis could postpone equity funds' exit from shipping

The depressing developments in the freight markets are far from what the private equity funds were expecting when they entered shipping, and the question now is how they will get out again, says New York-based investment consultant.

Photo: Privat

International private equity funds that bought their way into carriers and other shipping-related businesses during the financial crisis expecting that the industry cycle had bottomed out could end up waiting longer than originally planned to get out again and thus realize their potential gains from shipping investments.

"I think it's a bit premature worrying about private equity funds exiting shipping. Not all funds have reached their five year investment horizon, thus they have more time to wait. What is worrisome is that the freight market has not developed as expected, and most of these funds have yet to reach their expected return on investment," says Basil Karatzas of Karatzas Marine Advisors in New York, which serves as financial consultant to several private equity funds in shipping.

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