Industry complexities fuelling accelerating shipmanagement growth, says V.Group
The increasing complexities of regulatory and compliance requirements is forcing shipowners previously unwilling to considering outsourcing towards shipmanagers offering scaled efficiencies and digital solutions
Scale is only interesting if you can get something out of it, argues V.Group chief executive Rene Kofod-Olsen, but with new ownership comes boosted financial firepower and an accelerated growth strategy
AN opportunistic change in ownership may come with fortified financial firepower, but the strategic growth ambitions remain unchanged for V.Group, says chief executive Rene Kofod-Olsen.
“It’s really business as usual, maybe just a bit more accelerated,” Kofod-Olsen told Lloyd’s List after announcing the latest phase of private equity ownership for the ambitious shipmanager.
European investment fund manager Star Capital announced on Wednesday that its STAR IV Fund had teamed up with Antwerp-based investor Ackermans & van Haaren to buy V.Group from Advent International, becoming the fourth private equity player to take ownership of V.Group in the past 17 years.
The opportunistic play from Star, which has previously invested in German engineering group Blohm+Voss and boxship player MPC Container Ships, has been pitched as a means of realising V.Group’s bid to at least double profitability amid a rapidly growing outsourcing trend.
The rapidly influx of regulatory requirements for shipping, growing pressure to digitalise operations and decarbonise, and growing compliance risk beyond the means of many traditional shipowners has supercharged shipmanagement ambitions over recent years, but V.Group in particularly is pursuing an aggressive growth strategy.
The focus is organic growth, insists Kofod-Olsen, but V.Group has made no secret of its appetite for the right sort of acquisitions and having a deep-pocketed owner invested in the strategy opens up the possibility of further M&A activity to come.
The immediate financial advantage of increased equity will allow V.Group to pay down debt and strengthen its capital structure, says Kofod-Olsen.
“We’re focused on creating organic growth,” he explained.
“We have shown that we are open to inorganic growth opportunities which will now be accelerated, but we are not going to do something that we wouldn’t have done yesterday under the Advent leadership”.
V.Group has been chipping away at the traditional shipowner market for several years, preaching the advantages of scaled third-party management. While that process has been a slow burn, Kofod-Olsen says that the shipmanager is finally starting to win hearts and minds in markets that would previously have never countenanced the idea of not managing their ships in-house.
“I don’t think we’ve ever had a better quality pipeline than we have today, and I think we have won a lot of hearts and minds by the way we have conducted ourselves in the market over the past few years and that means we are now winning business from people who didn’t outsource before.”
According to Kofod-Olsen, only about 16% of shipping services are outsourced, leaving a lot of “white space” in the market and the new owners have bought into that rapid growth opportunity driven by incoming market complexities.
“The average shipowner has five vessels. How do you manage five vessels in today’s cost environment, in today's regulatory complexities, getting the right seafarers, getting the right operating team around you?”
“We made some calculations, and we believe that you need a sizable fleet of ships before it makes sense to do it yourself”.
Kofod-Olsen will not be drawn on targets or numbers, arguing that V.Group is pursuing quality not volume and “scale is only interesting if you can get something out of it”, however he concedes that growth is accelerating and they are just getting started when it comes to the long-term strategy.
“Converting traditional shipping companies into outsourcing is “hard and humbling work”, he says, “but we are going in the right direction”.
The Star Capital transaction is subject to regulatory consents and is expected to complete in early autumn 2024. Financial terms have not been disclosed.