Leasing firm seeks to double portfolio
ICBC Financial Leasing looks to foreign shipowners to raise the value of ship assets this year after signing 51-vessel agreement
ICBC Financial Leasing is targeting foreign shipowners with leasing deals as it seeks to double the value of its ship asset portfolio this year, a senior executive has confirmed.
Yang Changkun, managing director of ICBC Financial Leasing's shipping division, told the Post that "trying to double the value within a year is quite a challenge". Yang said the firm, an arm of the world's largest commercial bank by market value, already controls more than 150 ships that it leases to shipowners.
He was speaking after French offshore company Bourbon signed a US$1.5 billion sale and lease-back deal with ICBC Financial Leasing on Tuesday involving up to 51 ships.
Bourbon said the ships, comprising 24 in operation and 27 under construction, which are to be delivered within 14 months, are worth US$2.5 billion.
Under the deal, ICBC Financial Leasing will buy the ships at market price with a vendor loan of up to US$116 million. The ships will be chartered back to Bourbon for 10 years on a bareboat basis, meaning Bourbon will be responsible for all crewing and operating expenses. Bourbon will have the right of first refusal to buy the ships if ICBC Financial Leasing decides to sell the vessels during the lease period.
Banking sources told the Post that Bourbon initially started to negotiate the deal with Standard Chartered Bank, which has a ship leasing division, along with other banks in China.
Standard Chartered's ship leasing business includes an operation in Hong Kong, where it owns and leases vessels to operators including commodities outfit Noble and Wah Kwong Maritime Transport. Nigel Anton, Standard Chartered's global head of shipping, moved from London to Hong Kong about a week ago to help develop the bank's shipping operation.
Insiders said the terms Bourbon was seeking, including a private equity injection and a shipping-trust-type structure, were unacceptable to Standard Chartered.
Sources added that Bourbon then restructured its proposal to ICBC Financial Leasing into a straight operating lease, sale and lease-back arrangement.
Yang said ICBC Financial Leasing had not set a target for its fleet size, but sources close to the bank said the Bourbon deal was relatively small compared with the amount of money it had available for ship lease deals.
Its other shipowner clients include container ship owner Seaspan and Cosco.
Yang said: "We are trying to do more overseas business. We are quite open. We like to talk to any experienced shipowner. We are trying be the world leader."
He added that aside from the traditional shipping sectors, including the bulk market, "we are also looking at the offshore market - the entry level is higher".
"We do have substantial support on the money side," Yang said.