Restis eyes China cruise market

LONDON: Victor Restis, a Greek ship owner who says he made US$1bil selling dry-bul0k vessels before their price crashed, plans to expand into the Chinese cruise market in a bet on growth in the Asian nation’s tourism industry.

A joint venture with the government of the south coast province of Hainan intended to purchase new and second-hand cruise ships to meet rising demand for leisure travel as Chinese employees earning more and working less seek vacations, said Restis, whose companies control 200 ships.

“They need to provide leisure stories for the Chinese; it’s the sign of a matured society, the more leisure time a country has,” Restis said.

“We’ve moved a cruise ship there and are looking at what will be the next step of the expansion. It’s a huge market.”

The ship owner, with investments spanning banks, media and tourism, was diversifying after making US$1bil selling vessels during a three-year boom that ended by 2009, he said.

The largest ships that carry iron ore and coal have slumped 78% in value in the past four years, according to data from the Baltic Exchange, a London-based provider of shipping rates on international maritime routes.

“Today it seems good, at the time we were regretting it because the market was going higher and higher,” Restis said of the 45 vessel sales. They included the sale of a dry-bulk ship for US$130mil in May 2008, which is now worth U$15mil, he said.

The venture with Hainan might include new vessels that could each accommodate 2,000 passengers, Restis said, adding that his partners studied how Miami’s cruise industry developed. Most of the world’s new cruise ships are being built in Europe at the cost of between US$500mil and almost US$1bil, according to data from Clarkson Plc, the world’s largest shipbroker.

Restis said he was also expanding

Greek ship owner sees rising demand for leisure travel

Luxury liner: his offshore energy interests through Golden Energy Offshore AS in Norway, purchased in 2010. “We are looking at drill ships as well, the offshore sector is something that is very exciting.”

Restis is also one of the two largest shareholders in SwissMarine Services SA, a freight trading com- pany with offices in Geneva that earned US$1.3bil and carried 69 million tonnes of cargo in 2010, according to its website.

Restis’ stake was between 35% and 40%, he said. He is the largest shareholder in Seanergy Maritime Holdings Corp, which has a fleet of 20 bulk carriers and lost US$198mil in 2011.

He said he wanted the Restis group’s tanker and dry-bulk shipping companies, including Enterprise Shipping & Trading SA, to be capable of withstanding 12 months of no income, while stressing that he didn’t expect that to happen. The collapse in dry-bulk earnings might last until 2017 as prices of new ships at 20-year lows were prompting fresh orders, extending an oversupply, he said.

“The boom-and-bust cycle is a typical situation of the last 50 years in the shipping industry,” said Restis. “People make money, they get greedy and they reinvest although they know that the next competitor will do exactly the same.”

A glut of Capesize vessels has cut their daily earnings by 98% to US$5,036 a day compared with a peak of US$233,988 in June 2008, according to data from the Baltic Exchange.

The price of five-year-old Capesize ships, the largest dry-bulk vessels, plunged to US$34mil from a record US$153.8mil in 2008, its data show.

Any rebound in earnings is at least three years away, according to Restis.

“It’s very tempting to buy ships but we have to be patient,” he said, referring to second-hand vessels. Still, “once the market turns around then psychology turns and it’s very difficult to beat asset appreciations where there will be hundreds of potential buyers queuing up to purchase the asset.” — Bloomberg