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More Shipping Firms to Merge in 2017

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Container Shipping
  • More Shipping Firms to Merge in 2017

Indications have emerged that more mergers and acquisitions of shipping companies would be sealed in 2017, just as the cost of operations keep soaring.

Besides, growing level of merger of shipping firms showed that the worth of the container consolidation among the five majors currently estimated at $33.4 billion will soon soar with more agreement coming on stream in the New Year.

A recent Fitch Rating showed that muted demand growth would exacerbate overcapacity for the shipping sector in 2017, putting pressure on freight rates and driving further consolidation and defaults.

Fitch expects performance in all segments to be under pressure and has therefore maintained its negative outlook for the sector.
With the persistent crash in the container shipping business, world biggest shipping companies are losing billion of dollars. While some (including Hanjin Shipping) have liquidated, many more firms are finding solace in mergers.

The consolidation moves will further strengthen the capacity of the shipping firms and allow them to stay afloat in business. However, a number of seafarers will be layed off in the repositioning process.

Meanwhile, tanker shipping will face slightly less stress than dry bulk and container shipping, according to Fitch.Many container shipping and tanker shipping companies had sufficient cash to cover short-term maturities at their most recent reporting date, but they are still reliant on uninterrupted access to bank funding to cover negative free cash flow. This funding is even more critical for companies that are not able to cover their upcoming maturities.

Therefore, the filing for receivership in August by Korea-based Hanjin Shipping, the seventh-largest container shipping company in the world, may have far-reaching ramifications, according to Fitch.

In particular, creditors’ withdrawal of support may indicate a reassessment of the financing landscape, where secured bank funding for new vessels has remained relatively accessible even as market conditions have deteriorated.

Fitch expects more Mergers And Acquisitions (M&A) activity and defaults in the short and medium term. But these will only restore equilibrium and boost freight rates if they prompt capacity reduction.

In container shipping Fitch expects consolidation to affect companies across the entire segment, with smaller operators focusing on survival through increasing scale while market leaders such as Maersk Line defend their market position through M&A.

The latest statistics revealed by Vessle Value tagged: “2016 Container Consolidation” stated that these top five fleets are currently worth $33.4 billion and account for 33 per cent of the entire container fleet.

Senior Analyst at Vessel Value, William Bennett, gave the breakdown as; Moller Maersk AS/ Hamburg SUD has total value of $49.9 billion with 319 vessels holding 9.7 per cent of the total global fleet; China Cosco Holdings Co. is valued $47 billion with 190 vessels and 6.9 per cent market fleet; CMA CGM/APL is valued $46 billion with 150 vessels and six per cent market fleet. Also is Hapag-Lloyd/ UASC/ CSAV worth $5.4 billion with 123 fleets and 5.3 per cent of total fleet; and MOL/NYK Line/ K Line valued at $5.1 billion with 129 vessels and 5.2 per cent of market fleets.

According to the statistics, Maersk has paid roughly $4 billion for Hamburg Süd whose fleet is worth $1.5 billion. The deal is expected to complete end 2017. Entry of Hamburg Süd into the 2M alliance will put the alliance into the lead with 15 per cent of global capacity.

The Chinese state cabinet approved the merger of COSCO and China Shipping back in December of 2015. China COSCO Holdings have the largest fleet on order with 29 ULCVs and 4 post-panamax containerships. The Chinese owned container fleet is the most valuable at $17.6 billion and accounts for around 17 per cent of the market.

The largest acquisition in the French giant’s history, CMA CGM acquired Singaporean company. Recently it was also confirmed that APL would join CMA CGM in the Ocean Alliance which will subsequently represent 14 per cent of global container capacity, second only to the 2M alliance. The acquisition will make the combined fleet the 3rd most valuable in the industry.

Hapag-Lloyd completed their integration of Chilean line CSAV earlier this year. The new merger will bring Hapag-Lloyd’s average age down to 7.8 years from 8.7 years. Hapag-Lloyd and UASC will be the fourth most valuable fleet up from 10th and 8th, respectively.

One of the more recent mergers to be announced is that of MOL, NYK and K Line. Only the container businesses of these companies will merge and the consolidation is expected to be complete by 2018. The most valuable Japanese container fleet is Shoei Kisen valued at USD 3.0 billion and ranked 8th. In comparison, none of the other Japanese entities feature in the top 10 most valuable container fleets. The merger shows that consolidation can be used very effectively in the container industry to create a large footprint with only mid-size lines. The new arrangement makes the merged entity the 5th most valuable at $5.1 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Arla Food To Set Up Dairy Farm In Nigeria, Train 1,000 Dairy Farmers

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Arla Foods- Investors King

Arla Foods, makers of Dano Milk, has announced that it will build a state-of-the-art commercial dairy farm in Northern Nigeria where it plans to train and support up to 1,000 local dairy farmers as part of its long-term commitment to developing the Nigerian dairy sector.

The 200-hectare farm, scheduled to open in 2022, will have housing for 400 dairy cows, modern milking parlours and technology, grasslands and living facilities for 25 employees.

The firm said the farm is expected to produce over 10 tonnes of milk per day to supply locally produced dairy products to Nigerian consumers.

Managing Director, Arla Foods, Peder Pedersen said “there was a great need for nutritious food and dairy products to satisfy the growing demand from Nigeria’s fast-growing population.”

“This requires a complementary approach where imported food is crucial to ensuring food security while also supporting the government’s long-term agricultural transformation plan to build a sustainable dairy sector in Nigeria,” Pedersen said.

In 2019 Arla scaled up its commitment to developing a sustainable dairy sector in Nigeria with a new public-private partnership with the Kaduna State government.

It is the first of its size and offers 1,000 nomadic dairy farmers permanent farmlands. Arla is the commercial partner that will purchase, collect, process and bring the local milk to market.

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Appointments

The Board of Chemical and Allied Products Plc (CAP Plc) Appoints Vitus Ezinwa as a Non-Executive Director

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Chemical & Allied Products (CAP) Plc - Investors King

The Board of Chemical and Allied Products Plc (CAP Plc) has appointed Dr. Vitus Ezinwa as a Non-Executive Director of the company effective from Thursday June 17, 2021, subject to the approval of the Company’s shareholders at the next Annual General Meeting.

The company announced in a statement signed by Ayomipo Wey, Company Secretary/General Counsel, CAP Plc.

Dr. Ezinwa is a seasoned business manager and human resource professional with experience in leading multinational corporations.

He is currently the Chief Operating Officer (COO) of UAC of Nigeria Plc (“UACN”) and previously, the Group Director of HR at UACN.

Prior to Joining UACN, Dr. Ezinwa worked as Group Human Resources Director for Promasidor Africa; Human Resources Director, CocaCola Nigeria & Equatorial Africa with responsibility for 10 countries and Human Resources Director for British American Tobacco, West & Central Africa covering Ghana, Benin, Niger & Togo.

Dr. Ezinwa was, until recently, the Group Human Resource Director for Tropical General Investments (TGI) Group.

He is a member of the Advisory Board of Afterschool Graduate Development Centre, member of the Institute of Directors and a Fellow of the Chartered Institute of Personnel and Development (CIPD) UK.

He is a co-founder and Director of HR Network Africa and was until 2014, a member of the Lagos Business School’s Advisory Board. He holds a Bachelor’s degree in Sociology/Anthropology from the University of Nigeria, Nsukka, MBA in Management from Lagos Business School, a Master’s in applied business research and a Doctorate in Business Administration, both from Swiss Business School, Zurich, Switzerland.

In addition to holding an executive director role on the Board of UACN, Dr. Ezinwa is a non-executive director of Grand Cereals Limited.

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Business

DLM Capital Group Retains Position as Best Structured Finance & Securitization Team in West Africa

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Sonnie Ayere - Investors King

DLM Capital Group, a prominent Developmental investment bank, has once again emerged as the best-structured finance and securitization team in West Africa at the just concluded Capital Finance International (CFI) 2021 awards.

The leading developmental investment bank has won the award in the last three years to affirm its position as the leading investment institution and asset manager in the region.

CFI awards seek to identify the contributions of individuals and organizations that contribute significantly to the advancement of economies and truly add value for all stakeholders.

DLM Capital Group creates bespoke business solutions for alternative financing and harnessing funds for growth. The group focuses on four key sectors — consumer credit, agriculture, microfinance, and education with a mandate to reduce poverty and improve living conditions for Africans, while mobilizing resources for the continent’s economic and social development.

In the past three years, our portfolio management team’s performance has remained consistent, and our clients have benefited immensely from exposure to our solutions, including the NMRC securitization deal and the DLM Primero BRT Securitization,” said Head of Corporate Communications and Marketing, DLM Capital Group, Chinwendu Ohakpougwu.

We are positioned to provide services to an expansive client base of retail, high net-worth and institutional customers. DLM Capital Group remains committed to constantly providing financial solutions that will enable our clients make a difference, and we are honored to be recognized once again as a reflection of the quality of support offered to our clients’,’ she added.

DLM has won recognition in West African capital markets, acting as a sole arranger to over 80 percent of structured finance transactions in Nigeria — and all the securitization transactions. It provides deal structuring, advisory execution and capital raising services across the Nigerian capital market.

The Institution recently launched an asset financing scheme and is preparing a venture into digital banking under its subsidiary, Sofri.

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