Shipping IPOs Forge into New Territory

The volume of shipping equity raised from the public markets in 2006 represents a drop from the amount raised in 2005, but it could hardly have been any other way. What is amazing, really, is high how the volume remained, with nearly $5.8 billion of new public equity brought into shipping. Between vessel values and the overall size of the ship finance market remaining fairly stable and the cumulative effect of the public equity raised over the past few years in the bull market, the trend toward public ownership of the global merchant fleet is definitely growing.

Worth noting is that nearly half of all equity raised in 2006 was done so through non-initial offerings, whether through new share issues, sponsor sell-offs, or private placements for public entities. In other words over the past year growing public investment in shipping has been split between enlarging existing public companies, shrinking sponsor holdings, and taking new companies public.

And as this has occurred the market for public equity in shipping has begun to stabilize. There was a time in 2005 when the market for new shipping IPOs could rightfully be characterized as a bloody mess. But since the start of 2006, the vast majority of the 2005 IPOs (with exceptions, of course), have traded above their IPO price and have made quarterly payments of the promised yield to investors.

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