Some finance experts claim that traditional banking is gone the way we know it and equity funds are becoming popular in shipping finance. Which are the top financing institutions globally -apart from banks -when it comes to shipping investment? How are Shipping companies funded through this method? Which countries are more keen? Will it be really a threat for banking?
Hi @MarilenaAnagnost, it is true that in the last decade (and a half - since the global financial crisis) the shipping finance landscape has changed significantly. While traditional banking once only involved debt facilities with banks and equity financing, nowadays, alternative sources of funding such as convertible debt, private equity and sale-and-leaseback arrangements have become more popular. However, I don’t think that there is any immediate threat for banking, all these financing possibilities will just coexist in my opinion
Now with regards to the PE funds. PE funds have an opportunistic investment strategy and usually short-term investment horizon with specific return targets. PE funds, especially US-based funds, target distressed asset sales by banks. They can provide more flexibility in granting loans and can target riskier projects that banks are restricted from. Examples of PE funds include Oaktree Capital Management, Kohlberg, Kravis & Roberts (KKR).
Leasing has gained much greater momentum than PE funds. In that respect, top financial institutions today are China Exim, KfW, Kexim and many more.