Shipping Should Explore Private Equity Funding
International accountant and shipping adviser Moore Stephens says the time is right for shipping to seek financial backing from the private equity sector to help fund investment in innovative products and services designed to keep the industry competitive and achieve regulatory compliance.
Alison Jarabo of maritime efficiency specialist Fathom Shipping told the recent Moore Stephens Opportunities in Shipping Services seminar in London that regulation and the need to control costs were the two main factors driving the growth of technology in the shipping industry. She emphasised, however, that, “Technology and innovation may abound but, without end-users able to access the finance to deploy, the market will fail.”
Jarabo identified scrubber technology, ballast water treatment systems and ship performance management systems as some of the main technology opportunities in the industry today. She cited unreliability of technology, lack of in-service history, and lack of acceptable clear parameters as some of the potential barriers to uptake, but also noted that the shipping industry excels at anticipating changes in regulations, at the timely implementation of R&D initiatives, and at the adoption of consistent and coherent regulation on a global basis.
Moore Stephens shipping partner Richard Greiner says: “Although we have seen a partial return to the shipping sector by banks during the past twelve months or so, there is still a shortfall in available finance. This comes at a critical time for the industry, with significant investment required in technology and services to achieve compliance with environmental regulation and to maximise commercial performance.
“Shipping services providers who have developed the technology to meet these requirements need the financial resources to bring them to market. Similarly, end-users who have identified the technology solutions which are right for them need the funding to access and implement them.
“The shipping services market is currently attracting a lot of interest from private equity, not least because it is a highly fragmented sector with a wide range of business sizes. It is providing services to a tightly regulated industry in which a large number of developments are taking place. Private equity investors who have a firm grasp on the potential risks and rewards available in today’s shipping services sector could be a good match for well-founded shipping services and technology providers who have a clearly identified market for their products. Indeed, it could be argued that recent developments have created something of a perfect storm to bring the two together.”