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An equity fund established by billionaire investor Wilbur Ross has ordered up to four suezmax tankers at a Chinese shipyard, expanding his bet on shipping by purchasing supertankers for the first time.
Ross, a turnaround financier and chairman of WL Ross & Co., ordered four very large crude carriers due in 2016 and 2017 in a joint venture with AWilhelmsen AS, an Olso-based shipping company, he said at a conference in New York.
Diamond S Group Inc., a Greenwich, Connecticut-based company controlled by Ross, ordered the tankers with options for four more due in 2016 and 2017, he said.
Ross said he remains confident that the tanker market will recover even after weak freight rates scuttled Diamond S’s IPO earlier this year. Fuel-efficient designs will help his ships compete while limited capital will restrain fleet growth, he said.
Demand for tankers will outpace global oil consumption because supplies from Latin America and West Africa have to travel farther to high-growth Asian economies than to North America and Europe, Ross said. Suezmax demand grew about 4.9% a year between 2010 and 2013, while demand for supertankers rose 5.5% in the same period, he said. Those rates will slow to about 3.5% and 4%, respectively, as China’s economy moderates, Ross estimates.
Tanker rates are still recovering from a glut of vessels after owners ordered too many ships before the global recession. Average earnings for VLCCs, which hold 2 mln barrels of oil, fell 9.6% in the past year to $23,678 a day, compared with as much as $148,000 in 2008, according to the Baltic Exchange. Suezmaxes, which carry half as much crude, are earning $35,686 a day, down from $170,000 in 2008, according to the London-based rate publisher.
This follows news that WL Ross & Co. is seeking $1 bln to $2 bln for its next private-equity fund.
The business news service Bloomberg said last month that the target for Ross’ sixth main fund would exceed the $640 mln the New York-based firm completed raising in 2012 while falling short of the $4 bln it gathered for its fourth fund in 2007.
Ross, a former restructuring adviser at global investment bank Rothschild Inc., started WL Ross with $440 mln in committed capital. Previous funds amassed distressed holdings in steel, coal, textiles and auto parts. He made it onto Forbes’ August 2014 list of the world’s billionaires, with a net worth of $2.9 bln.