Case Study:
Hawaii Superferry

J.F. Lehman & CoNorwest Equity Partners. and Louis Mintz broke new ground when the pair agreed to fund the launch of Hawaii’s first high-speed intra-island ferry service this past November.

The fiftieth U.S. state currently stands as the only archipelago worldwide that does not have ferry operating between the major islands, as the Jones Act has effectively blocked the service.

The maritime law stipulates that commercial vessels traveling between American ports have to be U.S. built, U.S. owned, and operated by U.S. citizens. But what was at one point a cordon for action, represented an opportunity for the investors, as soon as Austul, an Australian shipbuilder, set up shop in Mobile, Ala. through a joint venture with a U.S. shipbuilder.

“The Jones Act essentially created this opportunity,”Dorian Faust notes, is whether the service will actually be used. “There’s always that question of, ‘If you build it, will they come?’” he states, although he is confident that the market is there.

While the time horizon of the investment will likely span at least until the second boat is put into service, the investors do anticipate eventually finding an exit, with possibilities likely to include a sale to either a financial or strategic buyer, recapitalization or even an IPO.

One scenario missing is a sale to a foreign buyer, as the Jones Act would preclude that, although the investors would probably prefer it that way.