Target: 30 vessels
Price: $2 billion, including $900 million equity
Sponsors: First Reserve Corp., WL Ross & Co., China Investment Corp., Fairfax Financial Holdings Ltd., Morgan Creek Capital Management, PPM America Capital Partners
Seller: Cido Tanker Holding Co.
Financial Adviser: Sponsor: Nordea Bank Finland, DnB Nor Bank ASA; Seller: Clarksons
Fresh off his firm’s first investment in the shipping business, turnaround guru Wilbur Ross said his firm isn’t done with the sector.
The firms are committing a total of about $900 million of equity, of which WL Ross is committing “a little over a third,” or $300 million, Ross told Buyouts. Nordea Bank Finland and Norway’s DnB Nor Bank are providing $1.1 billion in debt financing, Ross said.
Ross said his firm had been looking at shipping opportunities for a few years now, drawn to the gap between rising demand for oil and a shortage of vessels.
“This industry has a history of going from shortage to over-supply and it keeps vacillating between the two,” Ross said, adding that he also likes the recurring revenue aspects of the business, with oil and gas companies often signing shipping contracts lasting several years.
WL Ross is also looking at deals in other shipping-related areas, such as containers or bulk carriers that carry iron ore, grain and other products, Ross said. Other big-name buyout firms have also been drawn to shipping in recent months.
In March, The
And Leon Black told attendees of a recent conference that shipping is of major interest to his firm,
WL Ross will make the investment out of its fourth fund, which raised $4.1 billion in 2007. The firm is our raising its fifth fund, expected to be a similar size. Ross said he expects it to take another several months to raise.
Ross, who cut his teeth in restructurings during a 24-year career with Rothschild Inc., has found success in other complex and often struggling industries such as American steel and Japanese banks. Most recently, he joined Canada’s Fairfax Financial (which is also participating in the Diamond S Shipping deal) and California’s
Executives at First Reserve Corp. were not immediately available for comment.