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Fund managers generally see shipping as a niche market and a small investment opportunity, which for Niels Hartmann, the chief executive officer and board member of the Hartmann Group and founding member of owner and shipping fund manager Pelagic Partners, is a distant and commercially blind position to take.
With shipping responsible for the delivery of 90% of global trade and representing trillions of dollars of traded cargo, an investment in the sector is essentially an investment in the very heart of what keeps the wheels of the global economy turning, Hartmann tells Maritime CEO.
“Traditionally, fund managers investing in shipping are ‘outside’ financiers, with only a small and limited exposure to the market. They don’t have much in-depth knowledge or experience of the industry, or the reality of how it operates.”
Pelagic Partners was founded by the Hartmann and Abou Merhi families, which manage one of the biggest shipping portfolios in Cyprus. Hartmann says the company was established to challenge the conventional wisdom and redefine investment fund thinking in the maritime and offshore industries by marrying a shipowner mentality with a fund manager structure.
“We have a unique model whereby we are a shipowner first and foremost, that owns, manages and invests in maritime and offshore assets, but with the governance and safekeeping of a regulated investment fund structure.”
Hartmann reckons it is currently a good time to be a shipowner, and when investing in shipping diversification has been an important part of Pelagic Partners’ philosophy, which ensures that the company is not overly exposed to one segment or under pressure to invest in a specific segment or niche.
“A big advantage of being diversified, and not being focused on one specific sector, is that we’re more flexible in our investment approach. Right now, the market is volatile and on the high side, but we will continue to monitor how the landscape develops and respond accordingly,” he says.
Pelagic has three funds, and the offshore segment is something the company sees as a real area of growth, with goals to quickly take a top 3-5 market position with a modern offshore vessel fleet spanning both wind and oil and gas support segments.
The offshore wind fund has a primary issue of €125m to finance the equity portion, including the supervision costs of the newbuild programme of two commissioning service operation vessels (CSOVs) at Cochin shipyard in India for delivery in 2025, with an option to add a further four newbuilds. Once delivered, the ships will be managed by Pelagic Wind Services – fully owned by Pelagic Wind Fund.
The company is the second-largest shareholder is OSV player Golden Energy Offshore Services (GEOS). In early 2024, the Pelagic also expanded its market exposure by investing in two modern PSVs in partnership with the private investment and asset management firm, Borealis Maritime.
“We believe that the offshore sector will remain steady over the next five to six years, which, in conjunction with an extremely low order book and a continuing positive cycle in the sector, will likely lead to an increase in demand for PSVs,” Hartmann says.
Aside from the offshore wind fund, other funds include Pelagic fund I, established in 2020 on a five-year cycle, focussing on older-than-average vessels. The fund has an average IRR of 24% from exited projects, annual dividends of approximately 6%, including in 2024, while the NAV increased by 20%, contributing to a cumulative appreciation of 143% since its activation.
The Pelagic Yield Fund, on the other hand, which was launched in 2022 and is run with a flexible approach to vessel age, profile, and segment, has 50% of the fleet being placed on time charter as a target, and again to provide investors with annual returns. In 2024, the company provided investors with a 5.5% dividend, accompanied by solid NAV growth of 157%.
The shipping investment strategy will press ahead with eyes on potential opportunities that may arise in what Hartmann currently observes as a very fast-moving environment, but he remarks that there is no pressure to invest a specific amount but rather “focus on the quality of the investment over the quantity”.
Investments in newbuilds are currently not a priority due to the long lead time and elevated prices, but secondhand market is something the company will continue to keep a watchful eye on. Nevertheless, Hartmann notes that it is not always about buying but also about selling at the right time, and that the company currently has some potential opportunities that are spread out over a number of markets, including offshore.
The post Pelagic Partners: How to invest in today’s volatile shipping markets appeared first on Energy News Beat.
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