A shipping market riding high on the commodities wave has prompted UK shipper Braemar Seascope Group plc to expand its global presence with the purchase of Australian-based dry cargo shipbroker Seawise Australia for $A8.7 million (£4.6 million).
A shipping market riding high on the commodities wave has prompted UK shipper Braemar Seascope Group plc to expand its global presence with the purchase of Australian-based dry cargo shipbroker Seawise Australia for $A8.7 million (£4.6 million).
The acquisition – a mixture of cash and scrip – gives the publicly listed Braemar a geographical presence in the booming Pacific rim region, as well as in dry cargo ship broking services.
Seawise, with 36 employees based in Sydney, Melbourne and Perth, reported sales of $8.8 million and a profit before tax of $2.5 million last fiscal year. Its gross assets were $4 million and net assets $1.8 million.
Seawise’s major competency is in the transport of dry cargoes such as iron ore, coal, grain and alumina.
Seawise Perth-based director Tony Pegum said joining the Braemar Group would give Seawise greater international exposure.
“Ours is a very international industry and for the company to grow we need to play on the international level,” Mr Pegum said.
“Braemar gives us the opportunity to do that.”
Mr Pegum highlighted strengthened access to particular key Asian growth markets such as China and India.
“We already do business in these parts but Braemar have people on the ground and it will allow us to move more quickly at an operational level,” he said.
Braemar is a hugely diversified group of shipping-focused businesses.
As well as its significant capabilities in the tanker industry, Braemar has offshore servicing, container shipping, marine engineering, naval architecture (Wavespec) and shipping research businesses.
Braemar chief executive Alan Marsh said the acquisition was a very significant development.
“We have had the twin objectives of building our broking business in the Pacific rim and our presence in dry cargo shipbroking, the acquisition of Seawise achieves both,” he said. “We will look to maximise the potential that Seawise offers when integrated with our dry cargo operations in London and Beijing.
“Through this purchase we are significantly enhancing our global coverage.”
Three nominees from Braemar will join the Seawise board but Mr Pegum said Seawise’s management structure would otherwise remain intact.
One thing that will change, however, is Seawise’s ownership structure. With Braemar’s 100 per cent acquisition of Seawise, Swedish shipper Broström has sold its 30 per cent stake in Seawise.
Despite the booming shipping market Broström, a significant tanker owner and operator, believed there to be less strategic value in its shareholding in the dry cargo shipbroker.
Broström has had interests in Australian shipbroking for more than 30 years.
Its part-ownership of Seawise occurred when Seawise was formed in 2001 through a merger between national shipbroker SouthWest Chartering and the Melbourne-based Bridgewater.
Meanwhile, Mr Pegum said the dry cargo shipping industry was booming.
The soaring global demand for commodities, fuelled by huge industrial growth in China, has proved a bonanza for most Australian exporters, particularly miners.
The same bonanza was flowing into the shipping industry.
According to Seawise, Australian or Pacific round-voyage-per-day chartering rates for Cape- and Panamax-size vessels have increased from about $US22,375 and $US14,750 per day respectively since the beginning of 2003 to current rates of $US70,000 and $US35,000 per day.
While shippers were looking to increase the bulk carrier fleet, Mr Pegum said the global lead-time to construct new ships has blown out by up to three years.
“This is not because of the amount of time it takes to build a ship, but a reflection of the shipbuilders’ back orders,” he said.
