Hong Kong investor chasing European non-performing shipping loans
2 August 2018
Hong Kong-headquartered investment banking group SC Lowy has announced that it has acquired the shipping portfolio of one of Europe’s oldest banks.
Italian bank Banca Monte dei Paschi di Siena (BMPS), which was founded in 1472, has sold its non-performing loans (NPLs) with a book value of USD160 million to SC Lowy. The Hong Kong group’s co-founder and chief executive officer Michel Lowy told Fairplay he expects to acquire additional European banking NPL’s before the end of this year.
According to Lowy, each vessel has a number of investors and each has their own priorities, which can be detrimental to the vessel owners and operators. Lowy’s task is to iron out those discrepancies and allow the shipping company to develop.
SC Lowy’s acquisition of the BMPS shipping portfolio could lead to some investors ending their involvement in the shipping investment portfolio, which includes seven German, Italian, and Greek shipowners, with tankers, bulk carriers, and one offshore supply vessel all between three and fifteen years old.
Lowy said that he expects to see his group increase its investment in European banking portfolios before the end of this year. “We are in discussions with a number of other banks, [including European banks],” said Lowy. “BMPS is not the only bank that is a lender in the [latest] situation that we are involved in, so there is a dialogue with the banks to see whether they will want to exit.”
Part of the reasoning behind SC Lowy’s decision is that it has capital and it wants to invest. However, Lowy added, “[It is] also because when you have multiple lenders with different agendas it complicates the discussions.” In these situations creditors can destroy a lot of value added Lowy, but “We like to simplify the restructuring.” If we can consolidate the debt and sit down with one partner it simplifies the discussions.”
“We really like situations where we feel we can add value and bring new money so for us the best transactions, especially in shipping, have been where we would start as a normal lender and then we realise that because we’ve come in at a different point it is okay for us to lend new money. So, we’re looking at investments where we can become a real partner,” said Lowy. In general, the company is looking for bespoke opportunities. “We need to really understand what we’re purchasing in terms of the assets and the underlying asset growth or the avenue to the underlying asset growth,” explained Lowy, adding that this very often means buying claims or NPLs. Lowy’s approaches are often tailored to the situation depending on who owns the vessel and what type of vessel or fleet it is.
“We understand that sometimes entrepreneurs can lose money or can make a wrong investment, so we like to be involved with somebody that has possibly made an investment at the wrong time, but has demonstrated the right behaviour,” he added.