Alan Lam reporting from Hamburg
During the session on finance for ocean and river cruises at this year’s Seatrade Europe, held in Hamburg, the panellists from various leading maritime finance institutions and consultancies in Europe declared that appetites for financing cruise shipping had returned after the recent financial meltdown.
The funds for financing newbuildings and new companies are once again in place. Not only there are a number of ways of financing a new cruise enterprise or initiative, there are plenty of private and public investors interested in and willing to investing in the sector, which is no longer deemed as a “grey” investment, but a “white” one; by this it means that the industry is now a reliable and established business for investors who can legitimately expect healthy returns.
The money is there, we are told, and there is plenty of it. “Banks are ready to finance shipping again,” said Dr. Dieter E. Jansen of Dr. Jansen Newsmedia AG & EXXECNews. “Unbelievable amount of money is deposited in private bank accounts from which they generate no return. They [the account holders] are looking for investment opportunities. They are hungry for return. Anything more than 0% is a big deal today.”
The traditionally popular oil and gas market is not performing well either. Investors are now eager to put money elsewhere, such as in cruise businesses.
The financing options seem limitless, too. Besides bonds and shares issues, there are other tools like exports credits, direct state lending, combine bank and public financing, direct and indirect financing. In the USA, SPACs (Special Purpose Acquisition Companies) have emerged and available to finance cruise enterprises.
Banks are more willing to take risks in cruise enterprises, which are now considered to be a more stable industry. They continue to form consortium, often made up of 10-15 banks, to finance bigger and bigger projects. The German bank KfW, for example, is currently financing 47 newbuildings on Viking River Cruises.
As a tribute to the efforts made by the industry in recent years in promoting the economic and social benefits of cruise business, there is now also a growing appetite among governments to finance cruise shipping. There are a handful of 100% state financed projects currently underway in various parts of the world.
This is an immense opportunity on offer for the sector at the moment. While major cruise lines can relay on their own liquidity and shareholders to fund their schemes, smaller companies and new start-ups can rely on public and private financing.
