Marine Capital aims to launch shipping as new asset class
Eclipse Shipping, the UK's first major investment vehicle to offer direct access to the global shipping sector, has been launched by Marine Capital to provide institutions and high net worth investors with the opportunity to participate directly in a global industry where barriers to entry have traditionally been high.
The fund seeks to build a portfolio of directly held shipping assets within an English company operating as a private, closed-ended fund, with a fully transparent onshore operating structure within the UK Tonnage Tax regime.
The managers of the fund are targeting an annual net of between 20 and 30 per cent and the fund will have a life of seven years, although earlier exit may well be possible if market circumstances are opportune.
Marine Capital is an investment manager for ships and shipping assets that handles all aspects of shipping activity for investors, including financial management, reporting and distribution of profiles, and invests its own equity alongside that of its customers.
An experienced team with significant equity participation will manage the fund on behalf of Marine Capital, which will act as investment adviser and supervise the technical management of the ships.
'This fund presents investors with a unique opportunity to benefit directly from a sector uncorrelated with major equity markets and previously untapped by almost all UK investors,' says Anthony Foster, chief executive of Marine Capital.
'Returns have always been solid, averaging 24.5 per cent annually, ungeared, over the past 10 years, and the outlook continues to be positive. An investment in ships acts as a proxy for direct investment in developing economies, without the same risk. And while the dry cargo spot market has shown an apparently dramatic drop from all-time highs, there will continue to be opportunities to invest both in dry and our other key sectors of containers and tankers.
'I believe market fundamentals remain highly attractive for a vehicle of this kind. Shipping has a proven history of high internal rates of returns and historical returns beyond those offered by major stock markets, and appears relatively unaffected by the credit crunch and resulting turbulence elsewhere in capital markets. Should there be a knock-on effect on ships' prices, it is likely to be an even stronger buying opportunity.
'World trade growth, measured in ton-miles, always exceeds GDP growth. With trade growth weighted towards the large industrialising economies, such as China, Brazil, Russia and India, we believe shipping returns will remain above long-term historical averages and any sectoral dips should only be seen as further signals to buy.
'Not only that, but investments into the fund will benefit directly from the existence of the UK Tonnage Tax regulations, introduced in 2000, which provides the comfort of an onshore corporate environment, and for UK taxpayers, an almost tax-free ring-fence.'
Eclipse Shipping is structured as an English limited company in which investors own participating redeemable preference shares, with a minimum investment of USD500,000. Simple exit is possible through individual or group trade sales or a possible float, for example on the UK's AIM market.
There is an annual management charge of 2.5 per cent of equity under management, plus a 20 per cent management performance fee on returns above 10 per cent return, rising to 30 per cent on returns of more than 25 per cent, payable only on termination.
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