Tuesday, August 16, 2011

Private Equity Funds Invest In Ships

Up until now, those involved in owning ships have been individuals or families,
mainly in Europe.

The world is changing, and private equity funds in the U.S. have decided
now is a good time to start buying ships, especially tankers.

There is a lengthy article in Bloomberg, highlighting this, as well
as how the demand for oil and oil products will change, due to
refineries being built in China, and the waning of the European and
U.S. economies.

As I have stated before, the U.S. economy will soon be overtaken (if not
already) by China and India.

From Bloomberg
Billionaire Wilbur Ross is betting that the slump in shipping which drove oil-tanker returns to a 14-year low and rates for commodity carriers to the cheapest in a decade is ending.

The 73-year-old, whose New York-based WL Ross & Co. manages about $10 billion in assets, is part of a group spending $900 million on 30 ships hauling gasoline, diesel and other refined products. It is Ross’s first shipping investment and deploying “another few hundred million” in the industry “is certainly easy to do,” he said in interviews on Aug. 5 and Aug. 12.

That outlook contrasts with the pessimism of John Fredriksen, the founder of Frontline Ltd., the biggest operator of the largest crude carriers. The 67-year-old billionaire said in May it would probably be another year or two before ship values collapse and he can start adding to his fleet.

“The history of the industry is one that goes from immense prosperity to immense poverty and back again, and we think that’s going to continue,” Ross said by telephone. “We’re not necessarily at the exact bottom of the cycle, but we think we are relatively close to it.

Demand for shipping will strengthen because new refineries are being built in China and India, increasing the distance that vessels have to travel to deliver crude and pick up refined-oil products, Ross said. That will compensate for a “lackluster” U.S. economy, Europe “in much the same condition” and “very modest” growth in Japan, he said.

click here for link to article

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