Overcapacity Makes Investors Jump Ship
Private equity firms are pulling back their investments in the bulk commodity and shipping industries as a result of excess funding that has exacerbated overcapacity within the industry and are instead seeing returns on their investments on the tanker market, according to Bloomberg.
Andrian Dacy, Head of the Global Maritime Business Unit at JPMorgan Asset Management, said: “The level of fear has increased. Private equity will take a wait-and-see approach this year.
“Shipping is a volatile industry, so if you’re in you need to be prepared to stay in for a long time.” Mr Dacy later added that JP Morgan is focused on pure equity investments in new and second-hand tankers, as well as dry bulk vessels, and container ships.
Dacy concluded: “We had a large product tanker investment, now we have a smaller one.”
The Baltic Dry Index recently fell below 300 points, which is the lowest ever recorded, although it has since shot back up above the 300 mark.
The turbulent stance of the shipping industry has led many companies to at least mull over the sale of their assets in order to keep their bows above water.