Wilbur Ross hedges bet on emerging market growth

November 9
6:28 AM 2013

The billionaire investor Wilbur Ross had raised nearly USD100 million to purchase ships that haul coal, iron ore and grains. He is now hedging his investments on the projection that emerging markets would soon increase trade which in turn boost his business interests.

WL Ross & Co and his partners had recently purchased four Ultramax vessels with options to purchase for more ships. In a phone interview today, Ross confirmed the purchase and order but declined to name who his other partners were in his venture named Nautical Bulk Holdings Ltd. These ships would be delivered in 2015 by its builder, Jiangsu Hantong Ship Heavy Industry Co of China.

The ships have a deadweight of 65,000 tons and would carry designs that maximize fuel efficiency. Each would have its own crane to allow them to load and unload cargo in any kind of port setting. Each Supramax would cost nearly USD28 million per ship according to the second largest shipbroker in the world, Simpson, Spence and Young Ltd. Ross also did say he would be purchasing more ships and has shareholdings in tankers that carry fuel and LNG or LPG. 

According to Marine Money, a shipping industry research and publishing firm, a total of USD4.32 billion have been invested by private equity firms in shipping firms for 2013 alone. Overall, ship owners have invested about USD13.1 billion on new ships of this kind as of September 2013. In 2012, the overall expenditures reached only USD9.6 billion. 

In the phone interview, Ross said, "SInce we think a lot of demand for dry commodities is going to develop in the emerging markets, we think they're well suited to that." He also added that the shipping rates would recover by the time the new ships are seaworthy. Many others are seeing the same way as Wilbur Ross and his new ships.

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