(Yicai Global) May 17 -- Cosco Shipping Development Co., the financial services arm of China Ocean Shipping (Group) Company (COSCO), plans to set up an ocean freight industry fund in collaboration with some other Chinese companies, Jin Hai, shipping financial investment director at the company and would-be general manager of the fund, told Yicai Global.
The idea is Cosco Shipping Development partners up with financial institutions interested in the shipping market, and set up an industry fund as a general platform for serving the shipping industry and related businesses, Jin said. "The fund will also help rejuvenate bad assets in enterprises, shipbuilders and even vessels," he added.
"We're working with several institutions on the project. The fund has two sub-funds, a yuan fund in China, and a dollar fund to be established overseas. Both projects will be simultaneously developed." Jin, however, refused to comment on the exact size of the fund at this stage.
As a market-based industry fund oriented toward the shipping industry, it will fund and invest in shipbuilding projects and, more importantly, provide financial services for shipping enterprises, he said. It will focus on bad assets investments and financing operations, shipper reorganization and asset securitization.
Jin is optimistic about the development of the Chinese shipping investment and financing market this year, despite downturn in the global shipping market in recent years.
He believes, China's shipping investment and financing market is currently very active, and there are clear signs of a shift in the global market from the West toward the East. Ship financing conducted by the world's 10 largest financial leasing companies last year soared nearly 40 percent to USD11.5 billion, and the figure is expected to rise further to USD12-15 billion this year.
Development of the shipping investment and financing market depends on certain market segments. Structural opportunities are the key factor to consider when selecting individual shipping companies and projects, he explained. At present, the top strategic priority for shipping enterprises is to repair their balance sheets, improve cash flow and optimize business strategies. "It's still too early to conclude that the shipping industry has bottomed out as a whole."
Jin is bullish about assets securitization in the shipping sector, noting that shipping assets are particularly suitable for long-term value investment as well as securitization on the capital market.