The newly-established container carrier MPC Container Ships eyes strong potential in the feeder market and is now looking to expand its fleet with numerous vessels within the next year.
The carrier was established in April by German equity fund MPC Capital. The company has since then bought 13 container vessels with money from Norwegian, US-based, and British investors as well as capital from the founding fund.
We plan to raise USD 250 million within the next six to twelve months, and this will enable us to get around 35 to 50 vessels"
But the plan is for the fleet to be much bigger, Managing Director Constantin Baack tells ShippingWatch.
"We plan to raise USD 250 million within the next six to twelve months, and this will enable us to get around 35 to 50 vessels. This would be a good starting point for us," he says.
MPC Container Ships has raised USD 175 million over two rounds in April and May. The new investment round will now enable the carrier to take advantage of the recovery it projects will emerge some two years from now.
"We've analyzed supply and demand, and we note that the major carriers are mainly using their capital on larger vessels. We believe developments for the smaller vessel types will be favorable," he says.
German business profiles on the board
Hamburg-based MPC Capital founded MPC Container Ships in the spring this year after looking at the opportunities in the feeder market over a longer period of time.The company's fleet is aimed at the perishable goods trade, such as meats, fruit, and vegetables transported in refrigerated containers, reefers. The carrier will therefore focus in particular on the North-South routes.
And the board of directors also includes a prominent name from the German shipping sphere with experience in reefer transport. Namely Ottmar Gast, longtime CEO of Hamburg Süd, whose business is focused on South America.
The board also counts several other prominent German business people, such as Chairman Ulf Holländer, who also serves as CEO of founding fund MPC Capital.
Despite the close ties to Germany, MPC Container Ships is registered in Norway and listed on the Oslo exchange Merkur Markets. A decision which is especially related to the access to capital.
Betting on the Norwegian capital market
"It's virtually impossible to get capital in Germany, where the KG scheme and shipping banks are completely dry," says Baack, explaining that the company picked Norway instead, as investors there have a solid understanding of the cyclical nature of shipping.
"For historical reasons, the Norwegian capital market has also been mainly centered on tanker, offshore, and dry bulk. So we felt there was room for a pure play container carrier," he tells ShippingWatch.
It's virtually impossible to get capital in Germany, where the KG scheme and shipping banks are completely dry"
While the first ships have been paid for with the raised capital, most recently USD 75 million from a share issue, MPC Container Ships is now considering taking on debt, either from banks or the Norwegian bond market.
"The bond market is quite effective, and unlike other container carriers with existing debt, we're in a position where we can raise money through that market, so that's definitely a possibility. But we're considering both options," says the managing director.
MPC Container Ships expects that 2017 and 2018 will be challenging years for the container market, after which things will start to look better.
English Edit: Daniel Logan Berg-Munch