Post on 18-Dec-2015
transcript
KOREAA Dawning Ship Finance Exporter
The 2nd Annual Marine Money
London Ship Finance Forum
At The Dorchester, Park LaneThursday, 20 January 2011
MARINEM O N E Y
Index
I. Current State of Global Ship Finance Industry 4
II. Korea’s Position in the Maritime Industry 6
III. The Landscape of Ship Finance in Korea 11
IV. Institutional Investors in Korea 21
V. Closing Remarks 26
Contact 30
2
Disclaimer
Any and all information and opinions contained herein are as of the date of this material and the Firm does not undertake any obligation to update them. All market prices, data and other information are not warranted as to the completeness or accuracy and are subject to change without notice. Past performance is not indicative of future results, and the Firm is not providing investment advice through this material. This material does not take into account individual client circumstances, objectives or needs.
In reaching a determination as to the appropriateness of any proposed transaction or strategy, readers should undertake a thorough independent review of the legal, regulatory, credit, accounting and economic consequences of such transaction in relation to their particular circumstances and make their own independent decisions.
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4
I. Current State of Global Ship Finance Industry
0
20
40
60
80
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011 2012 2013
Shipping Loan Volume Newbuild Deliveries + S&P Newbuild Deliveries
• Since the 2008 financial crisis, the shipping industry has been undergoing the shortage of capital
Source: Deallogic, Clarksons
Demand and Supply of Shipping Loan [US$ billion]
Current State of Global Ship Finance Industry
5
Liquidity Shortage !!!!
US$ billion
6
II. Korea’s Position in the Maritime Industry
Rank #16; US$832.5 billion
Korea’s GDP Ranking
7
• Korea ranked the 16th largest country in terms of GDP with US$832.5 billion in 2009
Source: IMF
US$ billion
Source: Clarkson (Dec 2010)
• Current orderbook at Korean shipyards is 45.3 million CGT
• On a value basis, Korea is the world’s largest at approximately US$143 billion (36.5% of global orderbook), followed by China with US$123 billion
Orderbook by Country Value of Orderbook by Country 2010 [US$ billion]
The 2nd Largest Shipbuilding Nation
8
million CGT
Combined figure of China, Korea and Japan represents
85% of the World’s total orderbook
Source: Review of Maritime Transport 2010, UNCTAD
• As of Dec. 2009, Korean shipowners owned 1,235 Vessels totaling 54.1 million DWT
• Korea has 181 shipowners registered with the Korean Shipowner’s Association as of Jan 2011
Korea’s Shipowning Position in the World
The 6th Largest Shipowning Nation
9
million DWT
~
•Korea is the 3rd largest importer of iron ore and thermal & coking coal, and estimated to import in total 54.6 million tons of iron ore and 114.8 million tons of coal in 2010
Seaborne Iron Ore Import 2010 (E)
Source: Clarksons
Seaborne Coal Import 2010 (E)
million tonnes million tonnes
The 3rd Largest Importer of Major Bulk Cargo
613.4
10
650
11
III. The Landscape of Ship Finance in Korea
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Japanese Trading House
Commercial Banks
Asia Financial
Crisis
SIC Act Enactment
Restructuring
Sold 112 shipsLeasing Co’s
Korea Trading Co.Government
Support
History of Ship Finance in Korea : Pre - SIC
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Pre - SIC
Shipping Market Collapse
Post - SIC
In order to support an ailing domestic maritime industry, the Korean government designed a tax incentivized funding structure and legislated the SIC Act (Shipping Investment Company Act) in September 2002
The objective of SIC Act is to “establish the groundwork for the development of the maritime industry and ultimately contribute to the development of the national economy.”
The Act provides certain tax savings on the investment to Retail Investors. In addition, it allows those Funds raised by the licensed SIC Fund Managers to be listed in Korea Stock Exchange for further liquidity
The SIC Act
13
Retail Investors
Institutional Investors
Up to the amount of
US$270,000: tax free
2004~2008
Up to the amount of
US$270,000: 5% tax
2009~2010
Up to the amount of US$90,000:
5% tax
2011~2013
?
Jan 2014
No Tax Incentive to Institutional Investors
SIC Act Tax Incentive
14
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Asia Financial Crisis
SIC Act Enactment
Shipping Market Collapse
SICsRestructuring
Sold 112 ships
Institutional Investors
Leasing
Commercial Banks
Government Support
History of Ship Finance in Korea : Post - SIC
15
Post - SICPre – SIC
2004 2006 2008 2010
Source : SIC Fund Managers, Meriel
US
$ m
illio
n
• For the first 5 years since the enactment of SIC Act between 2004 and 2008, average of US$175 million was raised in local market for shipping transactions
• However, the amount had tripled in 2009 to US$517 million and increased over 5 times in 2010 to US$900 million
Ship Funds Placed In Korea Since 2004
16
Placement Method & Tranche
• Due to decreasing tax benefit allowed by the SIC Act, the more transactions are being placed through private placements, i.e. directly with end-investors rather than through SIC Managers
• In addition, investors began to participate more in equity or mezzanine tranche with upside sharing
Investor Participation by Tranche
Source : SIC Fund Managers Report, Meriel
Private Placement
17
Equity
Mezzanine
Junior
Senior
2006 2008 2010 2011 (E)
Taiwan(Bulker)
US(Bulker)
Venezuela(Barge)
China(Bulker)
US(Bulker)
Swiss(Container)
2007 2009
Greece(Szmx T)
Singapore(Bulker)
Indonesia(Chem T)
Singapore(DSV)
Transactions For Foreign Owners
US(Bulker)
Arranged by Meriel Partners
Public Private
Source : FISIS (Financial Statistics Information System)
• The main factor affecting pricing of Korean ship funds is the local bond yields
Historical Yield of Korea Ship Funds
19
%
Active Ship Finance Players in Korea
2002
CommercialBanks
Trading Houses
InstitutionalInvestors
SIC Act
20
• No longer are shipping investments coming only from KDB or KAMCO Funds; Korean Pension Funds, Insurance Companies as well as Savings Banks are approaching investments within the shipping sector as real investment opportunities
21
V. Institutional Investors in Korea
• Combined asset of major institutional investors in Korea is approx US$756 billion as of March 2010
• 9 Pension Funds manage US$295 billion and 42 Insurance Companies manage assets totaling US$390 billion
World’s Institutional Investors
Korea$0.7T , 1%
Luxembourg$2.8T , 4%
Germany$3.9T , 6%
United Kingdom$6.5T , 9%
Japan$8.7T , 12%
United States$29.7T , 43%
Others$17.13T , 25%
Major Institutional Investors In Korea
OECD Total US$69.4 trillion
Source: KOFIA(Korea Financial Investment Association), Mar. 2010
0
50
100
150
200
250
300
350
400
Life Insurance Pension Non-life Insurance Mutual Savings Banks
Life Insurance Pension Non-life Insurance Mutual Savings Banks
Overview of Institutional Investors In Korea
22
US$ billion
-
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009
• The following illustrates the historical portfolio composition of three major Pension Funds in Korea, which represent more than 90% of the total Pension Funds in asset size
• More than 80% of portfolio is invested in Bonds
US
$ b
illio
n
Alternative Investments
Bonds
Stocks
Others
Source : National Pension Service, The Korea Teachers Pension, Government Employees Pension Service
Pension Funds
23
• The following represents the portfolio composition of all life and non-life insurance companies in Korea over the past 6 years
• Majority of the portfolio is invested in debt and equity securities as well as loans
-
50
100
150
200
250
300
350
400
450
2004 2005 2006 2007 2008 2009
Alternative Investments
Securities
Loans
Others
Source : FISIS (Financial statistics Information system)
US
$ b
illio
n
Insurance Companies
24
• Alternative investments of both Pension Funds and Insurance companies have increased substantially over the past years
0
10
20
30
40
50
60
70
2004 2005 2006 2007 2008 2009
29.7%
Substantial Increase in Alternative Investments
Source : FISIS (Financial Statistics Information System), Marine Money Asia25
US
$ b
illio
n
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VI. Closing Remarks
27
Korea, A Dawning Ship Finance Exporter
Success StoryCompetitors made money
in shipping and boss pushes
Diversification Korean Institutional
investors are strategically increasing alternative
investments whereshipping is classified
Counter-Cyclical Investment Opportunity
People remember those who bought a landmark building in Seoul during Asian financial crisis and made huge profit
FamiliarityOver the past years, investors have
accumulated knowledge and experience in shipping
Less Competition Local real estate market, the main
areas for alternativeinvestment area to Investors, hasn’t
recovered
Is Ready To Provide Capital
Nationality of Shipowner (Borrower)
Any credible shipowner worldwide
Type of Assets Any type
Age Less than 15 year old
Investment Size Per Deal US$25 ~ US$250 million
Tranche
(Yield)
Senior to Equity
(7% ~ 12%+)
LTV Up to 100%
Investment Period 5~ 20 years
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Meriel Partners
The Right Partner
What you need is
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Meriel Partners
#1602, Boutique MONACO1316-5, Seocho-dong, Seocho-gu
Seoul, South Korea
Tel: +82 (0)70-8275-4440 Fax: +82 (0)2-3476-8444
Contact
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