Investment trust insider on ship leasing funds – James Carthew: Buoyant ship funds need to go net zero
It’s nearly six months since I wrote about the proposed launch of Taylor Maritime Investments (TMI). The trust hit its flotation target, raising $160m (£119m) from investors ($10m more than it had hoped) and then issued a further $93.7m worth of shares in exchange for its seed portfolio.
The news since then has been very good. A further $75m has been raised via an issue of shares at $1.15, both net asset value (NAV) and share price are up almost 40% since 27 May 2021, the company has started paying dividends, and expects to have a fleet of 32 vessels by January 2022.
Taylor Maritime sits in the leasing sector alongside Tufton Oceanic Assets (SHIP). Tufton Oceanic has also been raising money and expanding its portfolio. Its market value is up to about $400m (£297m). Coincidentally, it is trading on about the same share price and NAV as Taylor Maritime, but since launch back in December 2017 it has churned out some hefty dividends.
Tufton Oceanic met its 7 cent per share – or 7% yield on the initial public offer (IPO) price – dividend target for the financial year ending 30 June 2019 and has grown the payout since then. It is targeting total dividends of 8 cents per share for the current financial year and reckons that these will be covered by earnings 1.7 times.
The shipping market is booming. Container shipping business Maersk just announced its most profitable quarter ever. It expects global container demand will grow by 7-9% in 2021 as a surge in demand is compounded by congestion at ports. In the UK the situation at Felixstowe is particularly bad but this is a global problem. The truck driver shortage is an issue in the US too, for example.
As shipping rates climb, so does the value of the vessels that the two funds own. Tufton Oceanic’s NAV was up almost… read more here