This past week, the sponsor and primary shareholder of Diamond S Shipping Group, Inc., WL Ross & Co., decided not to proceed with the Initial Public Offering (IPO) due to unfavorable obtainable pricing. The company was planning to issue about 14 million shares at the $14-16/sh range.
Private equity funds have been the rage of the shipping markets recently. The present filing, it is indicative that private equity funds sooner or later will be looking for ways to exit their shipping investments, and the capital markets likely will be the most popular venue. Capital markets may soon be the ‘next big thing’ in shipping as there are already several filings in the US for shipping companies.
The ‘failure’ of Diamond S Shipping to go public at this stage is not a sign that the capital markets are not receptive to shipping companies. Some of the reasons for the ‘failure’ may have been due to circumstances pertaining to this company and issuing, especially concerns about proper pricing, valuation and expectations thereof. There are legitimate concerns that the MR tanker market is getting too crowed – which is affecting pricing; on the other hand, Ardmore Shipping Corporation (ticker: ASC) was successful offering 7 million shares in a follow-on equity offering and raising $90.2 million, still in the product / MR tanker sector, pricing that was in line with the company’s share price – which is at discount on a peer group valuation.
Please note herebelow three articles on the recent developments with Diamond S Shipping from different sources: Shipping Watch, a Copenhagen-based credible shipping trade publication, Bloomberg and the Financial Times. We have had the honor to be quoted in these articles.
2014, March 12: Lukewarm investors canceled IPO of Diamond S, republished from Shipping Watch.
2014, March 12: Wilbur Ross Suspends Diamond S Shipping IPO on Low Price, republished from Bloomberg.
2014, March 13: Ross upbeat after IPO cancelled, republished from the Financial Times.
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