THE BULLETIN BOARD: An alternative source for public equity

by Geoff Uttmark

In an industry as asset intensive and volatile as shipping, equity plays an important role. It can be a currency for acquisitions, but above all, it is a component of the capital structure that will not strangle a shipowner when the market turns sour.

Yet, public equity, especially from the US capital markets, has played a limited role in ship finance. The majority of vessels are financed with private debt and the equity component of such loans is usually provided by private investment by borrowers or, private equity investment funds and providers of mezzanine debt.

There are two reason for this. First, most shipping companies are too small to attract the attention (or be able to afford the fees) of underwriters. Second, the bulk shipping industry has not provided a return on equity that compares favorably with other offerings. There may be a middle ground for raising public equity in the US capital markets, though you won’t hear it from your investment banker – the now infamous “Bulletin Board.”

This is only an excerpt of THE BULLETIN BOARD: An alternative source for public equity

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