Oslo tops shipping list rankings
Øivind Amundsen, CEO of Oslo Børs, the Norwegian stock exchange, which is part of the Euronext group, “shares” his thoughts on why Norway offers unrivaled infrastructure to raise capital amid a rising market in new listing sectors such as containers and car carriers.
Oslo Børs has firmly cemented its position as the world’s leading shipping and shipping exchange. It now hosts around 40 major shipping companies with a combined market capitalization of almost €20 billion. Instead of less than 30 companies just a few years ago, these entities are also raising large sums of money through follow-on offerings and the Oslo Børs bond markets.
In the past 12 months alone, five new shipping companies have joined the list despite ongoing pandemic challenges. The last to ring the bell were Gram Car Carriers and LNG carrier Cool Company in January, Höegh Autoliners and dry bulk newcomer Himalaya Shipping just before Christmas, and Western Bulk Chart and HAV Group in September and March 2021, respectively. .
“To my knowledge, no other exchange has so many shipping companies, which makes shipping one of our three strongest verticals alongside energy and fisheries,” says Amundsen.
Most are Norwegian-owned, but are considered international as they are usually incorporated overseas. Sixteen of the 40 companies are incorporated outside Norway. The Wilhelmsen Group is an example of a local mainstay listed for many years. “We also have fully international businesses with few ties to Norway today in principle. Singapore’s BW Group, for example, has a strong presence with five listed weapons, including BW Epic Kosan and BW LPG,” says Amundsen.
Investors talk about shipping
They are attracted by Norway’s well-informed financial ecosystem, including well-informed investors. “Coming here, you don’t have to explain what a VLCC or a supramax is. They might be obscure terms everywhere else, but in Oslo most investors immediately know what you’re talking about,” says Amundsen.
It highlights MPC container ships to illustrate the user benefits of Norway’s sophisticated investor base, as well as how a company can mature from the junior markets of Oslo’s Børs to senior markets. “Based in Germany, they were first listed on our OTC platform a few years ago when the box market was at its lowest. They quickly progressed to our growth and then expansion markets, and during of the last 12 months to our main market and our main index. I doubt that this journey could be replicated so easily elsewhere.
Maritime capital markets are emerging from a multi-year lull, with a significant recovery in new sectors such as containers and car carriers. “I hope this continues, but I don’t have a crystal ball regarding future developments. Macroeconomic events of course have an impact on shipping, with tanker and gas tariffs likely to rise given the need for more energy shipments as a result of the war in Ukraine, for example. But everything changes over time, which explains the cyclical nature of shipping,” says Amundsen.
Increased liquidity and strong returns
Liquidity in shipping stocks has also increased, with big companies like Wallenius Wilhelmsen, Stolt-Nielsen, Golden Ocean and FLEX LNG now qualifying for blue chip indices such as the benchmark OSEBX. “Our Oslo Shipping Index with component companies across many segments has increased in value by just over 50% over the past 12 months, driven by strong earnings and increased interest. This does not reflect maybe not quite the good times before 2008 when the focus was offshore, but it’s very encouraging,” says Amundsen.
Decarbonization tops the list
Meanwhile, the industry is facing an unprecedented paradigm shift given the IM0 target of achieving a 50% reduction in emissions by 2050, upcoming EEXI and CII regulations and the package Fit for 55 legislative proposals in Europe.
“Most shipping companies will have to go through a decarbonization process that will require huge capital in the coming years. Many new entrants and existing issuers have already committed significant CAPEX to modernizing existing tonnage, ordering environmentally friendly vessels, energy-efficient propulsion technologies and, above all, digitizing. They are increasingly highlighting these efforts in their presentations to investors, and Oslo Børs will be a key catalyst,” said Amundsen. “We will also continue to champion transparency in capital markets.”
Shipping lines have also issued green bonds, some with stringent emission reporting requirements and variable interest payments tied to them. “This trend will continue to grow as companies seek out various forms of financing and investors seek instruments with a clear ESG link,” he adds.
Stay one step ahead
The transition to clean fuels is a big change that requires new thinking at all levels. Shipping companies are required to comply with mandatory requirements, but many want to be future-proof anyway. “It makes business sense because those on the front lines will be better equipped to win business and good charters in the future. If you don’t keep up with the times, you lose ground,” says Amundsen.
Institutional investors (such as pension and insurance funds, among others) make up 90% of Oslo Børs market capitalization and have their own ESG imperatives to invest in companies actively participating in the green shift, not just in greenwashing. “We will launch the OBX ESG Index to help direct investments towards sustainable projects,” Amundsen said.
The door is open to suppliers
“We would also like to see more technology providers and service providers execute listings and raise funds,” he adds, pointing to equipment specialist TECO 2030, which listed on Euronext Growth at the end of 2020. , as a good example of a supply-side innovator driving the financial community’s growing interest in cleantech value creation.
Another key selling point is that Norway remains buoyant in analyst coverage, compared to Asia and the US where it has declined in recent years. “We have the most analysts covering shipping stocks and they consistently rank well in global rankings. High-quality coverage is a big plus,” he says.
Nor-Shipping strengthens its network
Nor-Shipping is very important for Euronext. “We chose to partner because, as the preeminent global industry meeting, it is the best place to catch up with existing clients and outline what Euronext and the Norwegian market can offer potential new issuers. Raising venture capital, especially in a cyclical industry like shipping, is easier here than in many other markets, again because shipping is part of Norway’s DNA,” says Amundsen.
He can’t wait to meet old friends and face next week. “It’s going to be a hectic few days, but I’m ready and excited. Being an ambassador for the scholarship gives me a lot of energy,” he concludes.