Capital Link Podcasts - Shipping Forum Podcast
2026 18th Annual Capital Link Shipping & Marine Services Forum | Shipping is Cash Rich
Sep 15, 2026 · 39 min · 8 segments
Capital Link Podcasts - Shipping Forum Podcast
Sep 15, 2026 · 39 min · 8 segments
Andy DaceyGuestAlexey AtheslisGuest
John WesselGuestWe just came out of the leverage cycle of the boom of the pre-GFC and it was entering into the more distressed cycle.
So it's all about asset values are inflated, but you're making very good cash on cash if you believe the market continues.
and you're getting paid for I guess geopolitical risk or inefficiencies or friction um but it's a very different cycle it's a very all the analysis that we used to do which was looking at averages and long-term mean reversion if that exists ever in shipping obviously that's no longer relevant But you're definitely getting paid a good return on your asset if you believe this continues.
And from your standpoint as an investor, how easy is it to value that, your political risk? Or do you rather stay away from it?
we try we play across the capital structure so that's definitely the equity bet if you if you are somewhere between the debt and the equity then it's less you're relying less on that geopolitical premium um but if you look at over the last six seven years effectively shipping has been a great hedge and a beneficiary of all the inefficiencies of all the friction whether it's war or covid or ukraine or or mousse or so um and it's not just one so uh it's definitely what has proven is that there is more right tail um and the equation is not linear so uh these things create spikes and You want to be there and benefit from it.
So can I add, I think of course there is the earning side of things and asset values being elevated.
I would call it a challenging environment, believe it or not, because obviously when you're looking for the right deals, it's a very difficult environment, depending on what type of capital you're managing to realize the returns that people expect.
so for that you have to be disciplined and you have to structure deals in a way that you can create real alpha and that is very different from as alex was saying the environment where 10 years ago most asset values were trading at 60 percent of whatever that mean reversion should have been from today where you're playing with a 95 to 105 110 or even more percent of that pdrc you really need to make a deal structured in a way that differentiates from pure buying an asset and then waiting it out.
And after five, seven years, the market changed and everybody made money.
So it's a challenging environment for what we are doing in order to realize the type of returns that our investors expect.
That's a very good point.
And allow me to follow up a bit on this.
How do you approach that challenge? Is it more by looking at specific sectors or specific corporate situations or assets? Or is it more around kind of deal structuring and protecting yourself that way?
So for us, the two most recent investments we've made, we quietly entered the LNG sector over the summer.
And that took a lot of, it's been a couple of years now that we have been looking at the space and because we at the moment are not running the type of capital that gives you 8% levered returns.
We had to wait and look and find the deal and structure it in a way that provides you good downside protection, but also generates the returns that are in the sort of mid-teens type of returns.
In order to do that, okay, you're not going to build a new building because, you know, against that, you would need charters that would provide very low returns.
But you would probably look at what today is more tier two in the LNG space, which is 12, 10, 11, 12-year-old ships.
But that one knows if you have downside protection with some optionality in there over the next 10 years, you can expect a point in time when the market is going to um turn because the lng spot market at the moment is not is below break even and and realize that um further upside so i think you know hanging around the hoop and uh being out there actively doing a lot of face-to-face ai cannot replace that um is one way to go about it
We just came out of the leverage cycle of the boom of the pre-GFC and it was entering into the more distressed cycle.
So it's all about asset values are inflated, but you're making very good cash on cash if you believe the market continues.
and you're getting paid for I guess geopolitical risk or inefficiencies or friction um but it's a very different cycle it's a very all the analysis that we used to do which was looking at averages and long-term mean reversion if that exists ever in shipping obviously that's no longer relevant But you're definitely getting paid a good return on your asset if you believe this continues.
And from your standpoint as an investor, how easy is it to value that, your political risk? Or do you rather stay away from it?
we try we play across the capital structure so that's definitely the equity bet if you if you are somewhere between the debt and the equity then it's less you're relying less on that geopolitical premium um but if you look at over the last six seven years effectively shipping has been a great hedge and a beneficiary of all the inefficiencies of all the friction whether it's war or covid or ukraine or or mousse or so um and it's not just one so uh it's definitely what has proven is that there is more right tail um and the equation is not linear so uh these things create spikes and You want to be there and benefit from it.
So can I add, I think of course there is the earning side of things and asset values being elevated.
I would call it a challenging environment, believe it or not, because obviously when you're looking for the right deals, it's a very difficult environment, depending on what type of capital you're managing to realize the returns that people expect.
so for that you have to be disciplined and you have to structure deals in a way that you can create real alpha and that is very different from as alex was saying the environment where 10 years ago most asset values were trading at 60 percent of whatever that mean reversion should have been from today where you're playing with a 95 to 105 110 or even more percent of that pdrc you really need to make a deal structured in a way that differentiates from pure buying an asset and then waiting it out.
And after five, seven years, the market changed and everybody made money.
So it's a challenging environment for what we are doing in order to realize the type of returns that our investors expect.
That's a very good point.
And allow me to follow up a bit on this.
How do you approach that challenge? Is it more by looking at specific sectors or specific corporate situations or assets? Or is it more around kind of deal structuring and protecting yourself that way?
So for us, the two most recent investments we've made, we quietly entered the LNG sector over the summer.
And that took a lot of, it's been a couple of years now that we have been looking at the space and because we at the moment are not running the type of capital that gives you 8% levered returns.
We had to wait and look and find the deal and structure it in a way that provides you good downside protection, but also generates the returns that are in the sort of mid-teens type of returns.
In order to do that, okay, you're not going to build a new building because, you know, against that, you would need charters that would provide very low returns.
But you would probably look at what today is more tier two in the LNG space, which is 12, 10, 11, 12-year-old ships.
But that one knows if you have downside protection with some optionality in there over the next 10 years, you can expect a point in time when the market is going to um turn because the lng spot market at the moment is not is below break even and and realize that um further upside so i think you know hanging around the hoop and uh being out there actively doing a lot of face-to-face ai cannot replace that um is one way to go about it
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