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Maritime Saudi Arabia 2010 30th May – 1st June Finance & Investment in Shipping Marcus Machin CEO Tufton Oceanic (Middle East) Limited. Tufton Oceanic Finance Group. Tufton Oceanic Product Range. Fund Management. Advisory Services.

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Maritime Saudi Arabia 2010

30th May – 1st June

Finance & Investment in Shipping

Marcus Machin

CEO Tufton Oceanic (Middle East) Limited

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Tufton Oceanic Product Range

Fund Management

Advisory Services

* The ”Operating Lease Fund” is a combination of 2 managed accounts and other private investments. 8 investments were realised producing an IRR of 174%. The portfolio IRR including 4 unrealised investments is 115% since inception

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Shipping Market – Market Segments and Sub-segments

Wet Bulk


Dry Bulk

  • Crude/ Product/ Chemical Tankers

  • LNG/LPG/Ethylene Carriers

  • Container Ships

  • Cape Size/ Panamax/ Handy

Offshore Support

Offshore Production

General Cargo

  • RoRos

  • Reefers

  • Car Carriers

  • Semi-Submersible Rigs

  • Jack Up Rigs

  • FPSO / FSO

  • Drilling Ships

  • Platform Supply Vessels/ AHTS

  • Construction Vessels / MSV

  • Maintenance Rigs

  • Heavy Lift Ships

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Sources of Finance for Shipping

Sources of Funding

of the World Fleet

Bank Market Cap as of March 2010, US$ bnBank Market Cap as of Q2 2007, US$ bn

Private Equity


Gov’t Fleet




Estimated Unfunded


Public Equity


Bank Debt


Source Bloomberg

  • International Banks have traditionally been the source of the single largest component of financing of the world shipping fleet

  • The developments in the banks’ own businesses post financial crises means that this source of finance is less able to fund rapid future developments in both shipping and shipping infrastructure

  • Alternative capital structures are increasingly a viable source of funding for shipping and shipping infrastructure projects internationally and within the GCC

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Kingdom of Saudi Arabia – Macro Economic Context

Source: National sources, SHUAA Capital

*Includes oil-related manufacturing such as the petrochemical industry

Source: National estimates, SHUAA Capital

  • Saudi Arabia GDP growth reported to have remained positive during 2009 despite negative hydrocarbon sector growth

  • 2010 – 2011 projections of Saudi Arabian GDP growth exceed 4.0% led by the non-hydrocarbon sector with consequent positive effect on imports of bulk and finished goods

  • Continued expansion and diversification of the petrochemical sector in Saudi Arabia will serve to increase exports of Olefins and Aromatics – Saudi Arabia projected to increase share in global Ethylene market form 7.1% in 2009 to 10.5% in 2014

Source: National estimates, SHUAA Capital

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Current Reported GCC Regional Vessel Orderbook

  • In total 184 deep sea vessels are on order by the major GCC companies with, in aggregate, over 17 mil dwt delivering over the next two years

  • Of these, 89 vessels have been ordered by the top 10 companies in the region, of which a significant proportion remain to be financed

  • International banks, previously extremely supportive of regional owners have not been reported to have advanced new funding outside the government sector companies during 2010

Source: Clarksons 14/02/10

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Islamic Finance – Increasing importance but not immune to market forces

  • 2008 Headlines

  • “In 2008 Islamic Banking represented 22% market share in GCC against 10% in 2003.”

  • “Islamic Assets in GCC reached $285bn in 2008 – 35% of global Islamic Finance assets exclusive of those held by major international banking groups that are also active in Islamic banking in the region incl Standard Chartered HSBC, Deutsche Bank and BNP Paribas”

  • “29% of Islamic Finance in GCC in 2008 stemmed from Islamic windows of conventional banks”

  • “Worldwide, cumulative Sukuk issuance outstanding topped $100 billion, with local currencies remaining the denomination of choice. New players such as General Electric Capital Corp and International Finance Corp also saw fit to tap the Sukuk market”.

  • 2010 Headlines

  • “Nakheel, developer of Dubai's palm-shaped islands, in December narrowly met a $4.1 billion maturity on an Islamic bond, or Sukuk, after neighbouring emirate Abu Dhabi provided it with $10 billion in funds.”

  • “Gulf Finance House EC is negotiating with banks to roll over $100 million in an Islamic loan into a new two-year facility as it prepares to sell assets to improve liquidity”.

  • “Kuwaiti Islamic lender Boubyan Bank reported a net loss for 2009 on Wednesday, after booking provisions against bad loans. Boubyan - which is 40 percent owned by the country's largest bank, National Bank of Kuwait (NBK) - made a net loss of $179.1 million in 2009”.

  • “In 2007, the Sukuk market accounted for almost 50 per cent of the total GCC capital market issuance. In 2009, decreased to a meager 13 per cent. In 2010, so far, only one sukuk has been issued out of the GCC (5 year $450m Sukuk for Saudi based Dar Al Arkan rated AA3 / BB- / Ba2).

  • Sources: S&P, Arabian Business, Gulf News Rothschilds

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Islamic Ship Finance Examples and Structures market forces

Generic Investment Fund Vessel Ijarah Lease Structure

  • No ships financed in these facilities

  • Convertible into equity on a listing

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Tufton Oceanic – Contact Details market forces

Tufton Oceanic - London

1 Albemarle Street

London W1S 4HA


Phone: +44 (0) 20 7518 6700

Fax: +44 (0) 20 7518 6701


Erik A. Lind


Tel: +44 (0) 20 7518 6751

Andrew Hampson


Tel: +44 (0) 20 7518 6718

Tufton Oceanic - Middle East

Jonathan Hill


Tel: +971 (0) 4 702 6504

Marcus Machin


Tel: +971 (0)4 702 6503

Tufton Oceanic - Singapore (Representative Office)

Torkell Vold


Tel: +65 6884 7875

Important Notice

Tufton Oceanic (Middle East) Limited is regulated by the Dubai Financial Services Authority. Tufton Oceanic Limited is regulated by the Financial Services Authority in England. Tufton Oceanic (Isle of Man) Limited is licensed by the Isle of Man Financial Supervision Commission to conduct Investment Business. Tufton Oceanic (Far East) Limited is regulated by the Securities and Futures Commission, Hong Kong.

Tufton Oceanic (Middle East) Limited issues this presentation, on a confidential basis for the sole purpose of providing information about the maritime and offshore oil services sectors and possible investment opportunities in those sectors. Recipients are therefore bound by a duty of confidentiality in respect of all the information contained in this presentation.

The views presented are solely those of Tufton Oceanic (Middle East) Limited and other Tufton Oceanic group companies. Whilst this presentation has been prepared in good faith, Tufton Oceanic (Middle East) Limited make no warranty or representation (express or implied) and accept no responsibility or liability for the accuracy of any opinions, forecasts or other material presented which have not been independently verified. Prospective investors should make their own investigations to confirm the accuracy or otherwise of the material presented herein. Any liability is expressly disclaimed.

No information set out or referred to in this presentation shall form the basis of any contract. Any prospective investor shall be required to acknowledge in any subsequent agreement that it has not relied on or been induced to enter into such an agreement by any representation or warranty save as expressly set out in any such agreement.

This document is presented on the express understanding that the recipients shall use it only for the purpose set out above. Tufton Oceanic (Middle East) Limited gives no undertaking to give the recipient’s access to any additional information or update this presentation or any information or to correct any inaccuracies in it which may become apparent.

If you have not received this document directly from Tufton Oceanic (Middle East) Limited your receipt is unauthorised.