KKR today announced the formation of Maritime Finance Company (“Maritime Finance” or the “Company”), a new specialty finance company created to lend to the maritime industry.
Led by former Helios Advisors partners Kristan Bodden and Gabriel Tolchinsky, Maritime Finance is an asset-based lender focused on maritime assets in the offshore oil field services and traditional shipping sectors. The Company will originate, structure, underwrite, invest in and distribute debt financings secured by high-quality maritime assets, including drilling rigs, development and production assets, subsea construction vessels and other traditional shipping assets.
Maritime Finance will initially be capitalized with $580 million of equity, over 45% of which has been provided by KKR, including through its balance sheet, KKR Financial Holdings LLC (NYSE: KFN) and MerchCap Solutions (“MCS”), KKR’s recently established mid-market focused merchant banking venture with CPPIB and Stone Point Capital. The balance of the capital was arranged by MCS and included participation from various family offices, mutual funds, hedge funds and specialist financial services investors. Proceeds will be used by the Company to fund its establishment and operation, provide capital for newly originated maritime financings and potentially acquire a seed portfolio of outstanding loans.
Kristan Bodden, CEO of Maritime Finance and an investor in maritime assets for 13 years, stated: “This is an area that has historically been served by European banks. The current dislocation in the European banking sector has created a substantial funding gap in maritime asset financing. With Maritime Finance, we are capitalizing on an opportunity to fill an obvious void while at the same time aiming to provide compelling returns and attractive yields for our investors.”
According to AMA Capital Partners, over $220 billion of debt capital is required by the maritime sector through the end of 2014 and an enormous capital commitment is required to deliver the current maritime orderbook. Total offshore and shipping orderbooks are valued at $238 billion at cost and the lack of financing is impacting orderbook growth beyond 2016.