A growing number of shipping companies have been put up for sale recently, desperate to find new owners before a highly anticipated downturn in the global shipping industry, according to industry officials. The latest example was Hahn & Company’s move to sell SK Shipping’s tanker business.
Sale Frenzy
The private equity firm (PEF), which acquired a controlling stake in SK Shipping from SK Group in 2018, reportedly stands to earn 2 trillion won ($1.5 billion) through the forthcoming deal, which is expected to be signed with domestic or foreign shipping companies or other PEFs. H-Line Shipping, another Hahn & Company-owned shipping firm, is also said to be up for sale. The seller has talked with multiple potential buyers since earlier this year, according to industry officials.
Although Hahn & Company was unavailable for comment on this issue, the PEF’s potential divestments of its shipping portfolios are regarded as steps to keep pace with the global trend of shipping firms pursuing economies of scale. “It is difficult for smaller firms to make investments to satisfy environmental regulations, so more shipping companies are likely to merge with each other,” Samil PwC Director Lee Eun-young said. Earlier this year, Polaris Shipping began looking for a new owner.
Long Term Contracts
If Polaris Shipping succeeds in finding a new owner, a consortium of NH Private Equity and Aeneas Private Equity, which is the second largest shareholder of the shipping company, is expected to retrieve its investment, six years after the two PEFs began investing in the debt-ridden firm. The seller has sought to attract buyers by taking advantage of its long-term contracts with major shippers, such as Brazil’s Vale, as well as Korean firms including POSCO, the Korea Electric Power Corp.’s subsidiaries and Hyundai Glovis.
Among larger shipping companies, HMM has captured the market’s attention, since its creditors began the process earlier this month to privatize the company. However, the worsening shipping industry outlook and intensifying competition to sell shipping firms could make it difficult for sellers to achieve their goals. The Shanghai Containerized Freight Index, the world’s most widely used trade index for sea freight rates, which had surpassed 5,100 in January last year, is set to fall below 900 later this week, amid a decrease in freight volumes in the aftermath of higher interest rates, inflation and the economic downturn.
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Source: Koreatimes
