Tightening credit, violate market conditions, increased environmental regulations and rapid technological advancements are shaping the landscape of the shipping industry. The decision by several banks to stay out of shipping finance as well as the breakdown of established finance models, have led to changing conditions for the maritime investment sector. However, these developments have also created great potential for experts to enter the market.
With the launch of Hanseatic Capital Management (HCM), there is a new player that knows the shipping industry from the inside out. The latest addition to the Schulte Group acts as a specialised fund manager for investments in the maritime sector. HCM is licenced to manage Alternative Investment Funds (AIF) under the relevant EU directive by its regulator the Cyprus Securities and Exchange Commission (CySEC).
“There are various investment opportunities in the global shipping industry at the moment. Our experts identify efficiently performing vessels, so investors can create value through the acquisition, employment and subsequent disposal of undervalued shipping assets,” explained Kyriacos Charalambides, Chief Investment Officer at Hanseatic Capital Management.
HCM leverages on the heritage of its anchor investor the Schulte Group, whose roots date back to 1883. As a ship owner, Bernhard Schulte has been active in this kind of ventures for 135 years and thus draws on a wealth of expertise.
At the same time, this set-up ensures that the interests of the anchor investor, the fund manager and the shareholders are fully aligned so that investors can be sure that goals and risks alike are being shared. “We seek to develop a close and long-term partnership with our investors, offering them attractive opportunities in an industry that might not have been accessible to them before,” emphasised Kyriacos.
“Being a family-owned business ourselves, we share the same set of values and understand the central goal of capital preservation.”
“The fact that we are connected to a strong maritime organisation leads to a significant competitive edge over established or larger corporations,” Kyriacos emphasised.
HCM is able to draw upon the capabilities of the Group, which ensures the lean and cost-efficient management of the vessels in the fund and leads to attractive investment returns.
The Chief Investment Officer added, “The Schulte Group is involved in a broad spectrum of maritime activities. Together, we have a deep understanding of the market and feature a strong and comprehensive network. And what might be most important, our Group has been through various cycles of the shipping industry. This provides investors with a capable, stable and trustworthy partner. We understand the assets we manage and cover financial, technical and commercial aspects.”
HCM’s management combines the expertise from distinguished professionals from finance and investments to shipping, business and strategy. Together with the shipping knowledge and experience of the Schulte Group’s Advisory Committee members, who are heavily involved in deal origination and execution throughout the lifecycle of an investmentp, HCM covers all shipping markets.
“The lessons learnt from the past crisis have paved the way for stricter regulations to safeguard and protect the interests of the investors,” explained Kyriacos.
“We have embraced change and appreciate that investment structures for new equity capital placed in the shipping industry have to abide to the highest standards for investor protection and corporate governance.”
HCM’s first milestone was the activation of Hanseatic Fund VCIC Plc in July 2018, its first fund to be managed. EFG Bank (Luxembourg) and the international fund and corporate services provider Alter Domus act as the Fund’s independent depositary and administrator respectively. The fund aims to initially raise US$120 million and looks at all market segments of the shipping industry. It includes vessels such as dry bulk carriers, containerships, offshore vessels and tankers. The strategy aims at income generation and capital appreciation by identifying opportunities and the right time to invest. The investment goal is to provide investors with annualised returns in excess of 10 percent per annum over the term of the fund.
Aiming for a conservative use of leverage, the fund employs a commercially balanced employment strategy, including both shorter and period charters, which lowers the risk profile for the portfolio. At the same time, it allows the upside potential in the next market upturn.
Kyriacos explained, “Applying a strong focus on investor protection at all times, we find medium-ranged product tankers, handy-size and supramax bulk carriers as well as feeder-sized containerships to be the most interesting vessel types to consider for investment in a diversified asset portfolio, right now. Based on our analysis, we see great prospect in these types to capture the potential in the next cyclical uptrend and deliver the expected returns to our investors.”
On top of managing its own funds, HCM utilises the strengths of its AIFM licence to provide the full scope of fund management services to shipping investors looking to set up externally managed funds for shipping ventures.
The units of the Hanseatic Fund VCIC Plc also qualify as an eligible investment for the ‘Scheme for Naturalization of Investors in Cyprus by exception’, issued by the Republic of Cyprus. This scheme allows investors, under certain conditions, to apply for citizenship in the EU member country Cyprus, when investing in an eligible vehicle. Traditionally, these investments were made in the real estate sector. However, HCM offers alternative opportunities and adds to portfolio diversification and potential for increased returns for these investors. It also helps Cyprus to build a more diversified, sustainable and resilient economy by allocating capital to sectors other than real estate.
“It is our goal to deliver value to our investors by consistently exceeding their expectations and serving their best interests. Raising capital through investments by satisfied investors and delivering shareholder value will be a natural consequence of our investor centric approach,” Kyriacos summed up.