Shipping IPO Curse is Broken

Shipping stocks overall have suffered from poor sentiment over the past 3-4 years. As just one example of this lack of market enthusiasm, until late-January 2021, there had not been a successful shipping IPO (initial public offering) in the US markets since June 2015.

This five-and-a-half-year drought was finally ended in late-January with the placement of Zim Integrated Shipping Services (ZIM) on the NYSE; however, the initial experience was a bit of a disaster. ZIM was initially expected to price at a range of $16-$19, but then the market was hit with panic surrounding the ‘Wall Street Bets Gamestop (GME)’ short squeeze and concern about other contagion.

Several hedge funds supposedly backed out of the deal and ZIM’s pricing was further reduced to $15.00. Opening day was a disaster. The price plummeted to the mid-$11s and it traded in the $11-$13 range for nearly a week. We took advantage of this opportunity at Value Investor’s Edge by buying shares steadily from the mid-$11s to the mid-$14s. Eventually more investors started to pay attention and ZIM has now traded as high as the $20s, a remarkable improvement of nearly 80% from their first-day woes, after just two weeks!

It seems fair to say that the shipping ‘IPO curse’ has finally been broken!

What’s Next?

Now that ZIM has proven that a shipping IPO is indeed possible, what’s next on the agenda for shipping, especially now that key markets are improving?

There are several potential firms to watch. One is Navios Logistics (“NSAL”), which has reportedly filed confidential listing documents. NSAL is majority-owned by Navios Holdings (NM), which faces large debt maturities in early-2022 and could use these IPO proceeds to attempt to stabilize their firm. NSAL has a strong business including a long-term export contract with VALE, so this is a development we’ll be watching closely.

Another interesting firm, which would be more of a cross-listing than a fresh IPO, is MPC Containers (Oslo: MPCC). MPCC has benefitted tremendously from the turn-around in containership markets and owns the largest publicly traded small-size container fleet. MPCC is a potential consolidator in the space and they have made no secret of their eventual interest in a US-listing. In a recent interview with Value Investor’s Edge, CEO Constantin Baack reiterated that this is definitely on their radar.

What about failed IPOs from past years? John Radziwill-backed Good Bulk could be one such firm which might be able to pull the trigger in mid- to late-2021 if dry bulk markets indeed launch a recovery. Or what about more cross-listings? Okeanis Eco Bulk (Oslo: OET) is another interesting candidate, which recently upgraded their listing to the top Oslo exchange.

Exciting Times: Stay Tuned!

After an incredibly challenging 2020, things are finally interesting in the shipping markets again. These are exciting times and I look forward to more potential market activity and opportunities.