QInvest and Fortis Bank Nederland plan to launch a US$200mn shariah-compliant mezzanine fund targeting financing opportunities in the marine transportation industry.
The proposed fund will target mezzanine investment opportunities in deep sea vessels. With an average life of five years, the fund seeks to benefit from the down cycle of the shipping industry through an extended investment period of about 18 months. According to QInvest, the fund will pay a running cash yield and is structured to benefit from the potential asset appreciation on vessels through an equity kicker.
Furthermore, by focusing on the mezzanine level of capital structure, investors are expected to benefit from asset coverage, quarterly cash flows as well as a structure that allows them to benefit from any capital appreciation on the underlying vessels, says QInvest.
“Shipping asset values have been disproportionately impacted relative to the global economic downturn,” says Shahzad Shahbaz, CEO of QInvest. “This, combined with tighter credit markets, offers potentially attractive upside as the sector recovers, and we believe the fund will be well placed to unlock that value for our investors.“
Fortis Bank Nederland has been active in the ship financing industry for many years with more than US$7bn of shipping assets under management.
“The establishment of the fund broadens the product offering for our shipping clients,” comments Gust Biesbroeck, a managing director in Fortis’s energy, commodities and transportation division. “More importantly, it diversifies and increases sources of debt funding available for the global shipping market in an environment constrained by a general lack of available capital.”
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