This week US stock markets hit record highs with the Dow Jones Industrial Average exceeding 16,000 for the first time. In the shipping market average rates remain relatively low (see last week’s analysis of the Clarksea Index), but the strength of global equity markets and encouraging signs in certain shipping segments have helped to lift Initial Public Offering (IPO) activity to its highest level for 6 years…
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Various factors influence the IPO “window” including investor views on the market cycle, prospects in specific market segments and global investor appetite. Our Graph of the Week shows the amount of capital raised by shipping IPOs over the past decade (limited to companies whose main activity is the ownership of cargo or passenger vessels). The line shows the half-yearly average of the Clarksea Index. The boom in shipping rates in 2004 was followed by a surge in activity in 2005, when 25 IPOs raised a total of $6bn. Over half of this took place on the New York & NASDAQ stock exchanges, with US and Greek owners accounting for 15 IPOs between them.
In 2006 the index dipped and public market activity slowed, but in 2007 the index climbed back over $30,000/day and we recorded 17 IPOs worth $8bn. Greek owners and US stock exchanges were prominent again, although in terms of value a larger share was raised by Chinese companies in Shanghai and Singapore.
In the wake of the global financial crisis, vessel earnings and IPO activity fell away dramatically and in 2009 we recorded only 2 new IPOs. Rates and activity picked up tentatively in the first half of 2010, but there followed 3 years of limited activity as the Clarksea Index dropped under $10,000/day. During this period LNG proved to be one of the few active sectors and 5 IPOs have been recorded in this sector since April 2011. Recently LPG has also attracted interest and 2 IPOs have been placed this week.
In September the Clarksea Index climbed back above $10,000/day for the first time in over a year and this, combined with the strength of the US investment market, has helped to generate more activity not just in the gas sector but also from owners in the bulker and tanker (particularly products) sectors. So far in 2013 we have recorded a total of 7 IPOs and a further 5 OTC (over the counter) shipping listings (potentially leading to full listings in Oslo or New York in the upcoming months). Combined these have raised a total of $2.2bn – the highest annual total since 2007.
Last week we invited readers to submit forecasts for the 2014 Clarksea Index competition. Investors are making their own judgements and seem to be showing some confidence, but will they be as accurate as our winner? Those wanting to track details of shipping IPOs, followons and bonds can do so through the “Transactions” section on our Shipping Intelligence Network.