The statement suggests that it wasnÆt a lack of orders per se that forced the cancellation, but rather a fear that the stock would follow the path of many other recent IPOs and start trending downwards immediately upon listing. However, bankers say many institutional investors have turned their back on IPOs altogether in the current market environment, preferring instead to hold off and buy at a cheaper price once the stocks start trading û if they are willing to part with their cash at all that is.
The risk in going ahead û even at the bottom of the indicated price range û could have been considerable, given that Maritime Capital wasnÆt due to start trading until July 11. This time gap would leave investors exposed to the possibility of a lot more market downside.
ôIt isnÆt in the interest of anyone to list in this market,ö says one observer.
Indeed, Maritime Capital isnÆt the only one to decide to hold off. Also in the past 48 hours, IT services provider SK C&C has cancelled its listing attempt in Korea and sportswear brand XDLong has pulled its Hong Kong IPO after poor sentiment for an earlier newcomer in the same sector weighed heavily on the buying interest. Earlier this month, small-scale ship-owner Wah Kwong Maritime Transport Holdings, which is also active in the dry-bulk market, withdrew its Hong Kong IPO after failing to attract enough demand.
The interest in new listings deteriorated considerably after the Dow Jones index tumbled 3% last Thursday (June 26) in a move that led to sharp sell-offs in most Asian equity markets. The Dow has remained under pressure ever since and this Wednesday closed another 2% below its June 26 finish. Closer to home, the Singapore market has lost 3.4% over the past five sessions and Hong Kong is down 6.2%.
Maritime Capital also had to deal with an 8.4% drop in the share price of its closest comparable û Pacific Basin Shipping û during the first four days of its roadshow. Over the course of the entire two-week roadshow, Pacific Basin fell 5.5%, which reduced its 2009 price-to-earnings multiple to about 5.9x from 6.3x. At the low end of its price range Maritime Capital was offered at a 2009 P/E of 4.5x.
Maritime CapitalÆs CEO and founder Mark Harris û a former CEO of Pacific Basin û said in a written statement that investors had been very positive towards the company, which began operations less than a year ago.
ôWe received very strong support and validation from institutional investors for our company, our business plan and our strategy. Unfortunately, the performance of global equity markets has deteriorated sharply in the last few days and equity markets have closed for IPOs, regardless of the underlying fundamentals of the company.ö
Investors were also reportedly impressed by the expertise and track record of the management team and sources say the company would have had no problems raising money had the market been reasonably stable. It should also have no trouble getting additional funding in the private market should it decide to go that route instead. However, the sources note that the company has no immediate need for capital as the current leg of its expansion ( ie, the three vessels that the company is scheduled to receive this month and the one on order for March next year) is already fully funded. These four additional ships will bring its total fleet to 18 û a significant achievement from a company that took delivery of its first vessel in October 2007. The plan is to expand that to 25 to 30 vessels by the end of 2009, but as of now Maritime Capital has made no commitments and has no outstanding liabilities with regard to that plan.
All of the companyÆs ships are of the so called ôMarCap Handysizeö type, which refers to sizes between 18,000 and 29,999 deadweight tonnes û a segment which the company believes has the most attractive supply/demand dynamics within the bulk shipping industry. Smaller ships like these are typically used to transport products like cement, sand, timber, copper and soft commodities such as sugar and wheat.
The company charters its ships out primarily on a bareboat basis, which takes a lot of the risks away from the owner since the charterer is responsible for all operational costs, including maintenance and fuel.
About $200 million of the offering was made up of primary shares, which would have accounted for two-thirds of the total deal, including the 15% greenshoe. The base deal amounted to $261 million and was being offered at a price between S$1.24 and S$1.46 per share. Including the shoe, Capital Maritime would have had a freefloat of 45%.
UBS was the sole bookrunner, while UOB was meant to arrange the retail offering.
¬ Haymarket Media Limited. All rights reserved.
