US alternative asset manager EnTrust Global has preferred to let its shipping investment record do the talking.
But following the takeover of ABN Amro's Maas Capital Shipping by EnTrust's Blue Ocean unit, managing directors Svein Engh and Omer Donnerstein have opened up about how the platform has grown to become one of the biggest players in maritime finance.
Blue Ocean has raised $2.6bn since its establishment in 2015, with $2bn set to have been deployed by the end of October 2021.
The start-up was driven by the banking dislocation, with traditional lenders pulling back.
Engh and Donnerstein were both at US ship financier CIT previously.
"We started with a clean sheet, just an idea that we were going to start a new business lending to the maritime industry," Blue Ocean portfolio manager Engh told TradeWinds.
"We decided that we were going to have to build this brick by brick, unlike others who said, 'We're going to do this and this', before raising one dollar. We decided to keep a very low profile until we had done something — not just raised the capital but also deployed it.
"At this point, it's a bit of a coming out for us in the maritime industry, because very few realise just how much we've actually done. It's been a lot of hard work."
Donnerstein added: "We are one of the largest private capital providers to shipping worldwide now, in terms of dry powder and also in terms of how active we've been recently."
He said Blue Ocean has been particularly busy in Greece.
The company describes itself as a cyclical investor, avoiding pumping in money when markets are strong.
"We believe in a countercyclical approach," Engh said. "It might not be the best time right now to go out and buy containerships because the market is so crazy."
On the dry bulk side, Blue Ocean feels there is a dislocation between price and what the ships are actually earning now, so deals are under scrutiny.
He views tankers as probably the most interesting area right now, for investing or lending.
"We always have to be aware of the cyclical nature of this industry," Engh told TradeWinds. "That's what we've all learned. I've been doing this since 1987, so I've seen a few cycles, up and down."
Seven people are now employed at the head office in New York.
"We've grown probably more than people realise. Our bread and butter is lending, but we also do equity investments," Engh added.
The group has also set up Purus Marine as an environmentally focused vessel leasing company, managed in London.
Donnerstein said finance platforms such as Hayfin Capital and private equity funds were competitors in Blue Ocean's early days.
The company began by buying loans from financial institutions and made investments in public bonds.
"We've done anything from senior loans, to mezzanine, preferred equity and equity," Donnerstein added.
Financiers need to be everywhere
"It's been very broad. Our view was that we're shipping investors and in an industry and a market which moves around and changes, you really need to be everywhere."
This allowed the firm to take more positions in bonds during a big sell-off 18 months ago.
EnTrust is a manager of roughly $20bn in assets, with a substantial sales and distribution team that works with Blue Ocean.
A big factor in the team's success is the way it is set up, the bosses said.
"We built this from the ground up, everything is in-house, we're not outsourcing the origination or management functions," Engh explained.
"The Blue Ocean team does everything. That enables us to get a lot of transactions executed, because when our counterparties talk to Omer and me, they know they are talking to the people making the decisions over the life of the loan."
There is a flat structure of executives involved in the decision-making process. "That's really paid off," Engh said.
"We've always been careful about the ships we take as security because we don't want to have the worst in class when it comes to fuel consumption and emissions. There is a risk now that some of those types of ships might become obsolete."
New additions checked out
Potential purchases are always inspected, using a UK firm that looks at historical fuel consumption, increasingly important as the energy transition gathers pace.
Outside the Maas Capital platform, Blue Ocean expects to continue growing.
"There is still a lot of demand for capital from borrowers," Engh said.
He said Blue Ocean has a real advantage as part of the overall platform, with huge support from EnTrust Global chairman and chief executive Gregg S Hymowitz. "We think we're in a good place," he added.
