We read with interest in the FT that private equity investors will "introduce more sophisticated financing and integrate onshore investments such as mines with shipping."
Serial investor Wilbur Ross, known for seeking out industries in trouble, said "…the swashbuckling, larger-than-life characters typical of the industry will be less prevalent going forward."
Mr Ross, whose previous, significant investments include petroleum product tankers and liquid petroleum gas carriers, said private equity executives are usually "buttoned-down, methodical" people who are very different from shipowners working mainly on intuition.
Forgive us our cynicism, but we're not entirely convinced. These things are cyclical, and there are many different types of shipowner out there today, many of them with "buttoned-down, methodical" leaders and analyst on the team. Just as banks in shipping come and go and shipping IPOs wax and wane in their popularity, so, we suspect, will shipping's attraction to the private equity mob.
We certainly wouldn't be surprised to see investment in shipping doubling by the end of next year but equally we won't be surprised when the private equity money chases another ball when their shipping investments look ripe for cashing in.
In our limited experience, private equity investment is no more or less sophisticated than any other source of ownership and financing. What they all have in common are human beings who, as we all know, are as capable of missing an oncoming economic train crash as they are of betting on the wrong horse.
