With a combined fleet of 52 product tankers and 16 crude oil tankers, the merger of 43 tankers from Diamond S Shipping with the 25 product and crude oil tankers of Capital Product Partners (CPLP) creates the second-largest handy tanker fleet.
Diamond S Shipping: second-largest handy tanker fleet in the world (source: VesselsValue)
Shipping is still a persona non-grata as far as US stock exchanges are concerned. However, merging with an already listed company is one route toward the holy grail of an IPO.
The aim of this latest merger (see Hafnia Tankers and BW Tankers) is to launch the combined fleet under the name Diamond S Shipping Inc, as a secondary IPO following on as a spin off from the already publicly traded CPLP.
CPLP reports the deal is worth US$1.65Bn and that it was undertaken to “access public markets with enhanced scale at a cyclically opportune time to create one of the world’s largest shipping companies well positioned for future industry consolidation.”
This is taken to mean that the newly formed Diamond S Shipping Inc will be raising new funds from shareholders and lenders to grow the fleet to take advantage of its expected upturn in the tanker market.
VesselsValue senior analyst Court Smith commented on the deal, saying “We appear to be at the bottom of a market cycle for MR tankers, leaving plenty of upside for the asset value of the underlying vessels.”
The combined fleet has an average age of 7.8 years old.
Currently, Diamond S Shipping has no vessels on order.
However, Capital Maritime and Trading (CMT), the private company of CPLP sponsor Mr Evangelos Marinakis is due to take delivery of three 2006-built Aframax tankers purchased from BP.
CMT is about to take delivery of Amphion, a VLCC constructed at Samsung, with a further three VLCCs due for delivery from Samsung in 2019. CMT also has two LR2 tankers on order at Daehan.
No doubt the impact of this merger will be a source of discussion at the Asian Tanker Conference next February in Singapore