New shipping trust may float – Taylor Maritime has published an intention to float announcement this morning. The fund hopes to raise $250m by issuing 250m shares at $1 per share.
Taylor Maritime was incorporated in Guernsey on 31 March 2021. It is a self-managed investment company (employing its own managers) and will invest in a diversified portfolio of vessels which will primarily be second-hand Geared Ships (Handysize and Supramax types). They say that these vessels have historically demonstrated average yields in excess of 7% a year and are capable of being acquired at valuations that are expected to be below long-term average prices.
7% target yield
The company will initially target an annual dividend yield of 7% (on the initial Issue price) paid quarterly with the potential for further growth over the long term. The company expects to declare its first dividend of 1.75 cents (or the sterling equivalent) for the initial period ended 30 September 2021 in October 2021. Once the company is fully invested, it will target a total NAV return of 10-12% a year over the medium to long term.
The executive team, led by Edward Buttery has worked together at Taylor Maritime Group before transferring to the company. That previous company was established in 2014 and is a privately owned ship-owning and management business with a team that includes the founders of dry bulk shipping company Pacific Basin Shipping (listed in Hong Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic Shipping) (listed in Oslo BWEK:NO).
The executive team is based in Hong Kong and London. They have a track record of buying over US$1.3bn of the sorts of vessels that Taylor Maritime wants to invest in, with a track record that goes back to 1987.
Ready to hit the ground running (or maritime equivalent thereof)
A seed portfolio has been assembled comprising 23 Handysize and Supramax dry bulk vessels which is expected to ensure that the net proceeds of the IPO will be fully committed shortly after admission with all ships fully operational from their respective acquisition dates, generating income immediately. The company expects to enter into agreements shortly to conditionally agree to acquire the seed assets. The final valuation of these will be included in the prospectus, which is intended to be published in early May 2021. [We’ll look out for it and publish it here when it is ready.]
The seed assets have an average age of 11 years and an estimated average remaining life of 17 years. No single vessel will comprise more than 10% of the gross assets of the company. 17 of the 23 seed assets are already under the commercial management of Taylor Maritime, with the remainder sourced from vendors who are well known to the executive team and Taylor Maritime. In addition to the seed assets, the executive team has a pipeline of other target assets, comprising primarily Handysize and Supramax vessels, worth about $500m.
Jefferies International Limited is acting as sole sponsor, global coordinator and bookrunner in relation to the IPO. There is an offer for subscription element, which should allow ordinary investors to participate (subject to the usual geographic restrictions, of course).