Ship manager teams up with New York merchant bank to draw family office backing on charter-in trading platform
Investors are backing a new joint venture between a New Jersey vessel manager and a New York merchant bank that allows a closed-end trading play on the crude tanker market. The new fund, called Mjolner Solutions, is a collaboration of manager Mjolner Shipping and maritime-focused bank Mid-Ship Capital. It plans to trade tankers from VLCCs down to panamaxes.
Against a backdrop in which many investors have booked paper or actual losses buying crude tankers over the past five years, Mjolner is offering an “asset-light” chance to play on rates with reduced risk over a fixed 3.5 year investment, Mjolner chief executive Kevin Wise and Mid-Ship chief executive Dean Fezza told TradeWinds in an interview this week.
“You've seen a lot of private equity and hedge funds who wanted exposure to assets and bought ships,” Wise said. “Being asset light, we take out the residual risk of owning the asset, offer our expertise within the trading platform and provide a specified exit from the investment.”
Neither Wise nor Fezza would reveal the size of the fund, which had a preliminary closing on 15 August, other than to say it is less than $100m and could still grow by year's end. It has been funded with both equity and debt.
“We targeted high net-worth individuals and family office investors,” Fezza said. “They all have in some way generated their money through the energy industry more broadly.
“We think that investing in steel is also reaching attractive levels, so we're not trying to say this is the be all and end all, but we are very comfortable with our partner's ability to generate a premium trading the positions.”
Wise agrees that steel valuations are attractive in themselves but he adds that the spate of new building ordering activity complicates things.
“What is more uncertain is what's happening on the supply side,” Wise said. “It seems like every other headline there's an owner ordering four-option-four or five-option-five, especially on the [VLCC] side.”Mjolner got its start as a standalone company in 2013 and today it has 15 ships under management across four sectors, with 11 employees.The fund allows it to expand the scope of its operation through outside investment.The new investment could allow 15 to 20 ships at a time depending on the market, he says.
“The scale is going to be beneficial,” he said. “We want to be able to control the scale of the operation a little more, rather than have a standard pool where people can leave on 90 days notice.”
Mjolner Solutions will consider everything from spot trading to re-letting a charter depending on what the market dictates, he says.
While Mjolner's ability to attract external funding to a trading platform is innovative, it is not unprecedented. It is understood that both Connecticut's Penfield Marine and Navig8 group has quietly been able to attract investors to such funds over the past five years.