Pooling: Bringing vital consolidation to shipping Marine Money, Busan Korea 28 October 2015 www.navig8group.com
Why 8 and what does that mean? 2
Why 8 and what does 8 mean? FR8 (Freight) 3
Why 8 and what does 8 mean? FR8 (Freight) Navig8 (Navigate) Gener8 (Generate) Integr8 (Integrate) 4
GROUP OVERVIEW AN INTEGRATED GROUP OFFERING MARKET-LEADING COMMERCIAL MANAGEMENT AND MORE We aim to be the leading global provider of commercial management and associated shipping services to ship owners, investors and financiers World s largest independent commercial management company 306 vessels under Navig8 management 7 tanker, 5 chemical and 4 dry bulk pools 54 pool members from 18 countries 13 offices worldwide with 325+ employees Group incorporates bunker trading and technical management businesses Established in March 2007 Majority owned and controlled by proven management. The Group is led by major shareholders Gary Brocklesby and Nocolas Busch, former Glencore executives and founders of FR8 Three asset-owning platforms with over 100 vessels 5
GLOBAL PRESENCE OUR GLOBAL OFFICE NETWORK PROVIDES UNRIVALLED ACCESS TO REGIONAL MARKETS 24 HOUR GLOBAL COVERAGE HOUSTON OFFICE Navig8 Houston: Commercial Mgmt Integr8 Fuels America: Bunker Trading ORLANDO OFFICE Integr8 Fuels America: Bunker Trading CONNECTICUT OFFICE Navig8 America: Commercial Mgmt Integr8 Fuels America: Bunker Trading HAMBURG OFFICE Integr8 Fuels Germany: Bunker Trading OSLO OFFICE Integr8 Fuels Oslo: Bunker Trading LONDON OFFICE Navig8 Europe: Commercial Mgmt Navig8 Ship Management: Branch Integr8 Fuels Europe: Bunker Trading ATHENS OFFICE Navig8 Athens: Representative Office Integr8 Fuels Greece: Bunker Trading ISTANBUL OFFICE Integr8 Fuels Germany: Bunker Trading DUBAI OFFICE Navig8 Dubai: Commercial Mgmt Integr8 Fuels DMCC: Bunker Trading SINGAPORE OFFICE Navig8 Inc: Time Chartering & Ship Owning Navig8 Ship Management: Technical Mgmt Navig8 Asia: Commercial Mgmt Navig8 Risk Mgmt: Risk Mgmt / Derivatives Trading Integr8 Fuels Asia: Bunker Trading MUMBAI OFFICE Navig8 Mumbai: Technical Mgmt; Crewing DELHI OFFICE Navig8 Delhi: Commercial Mgmt SHANGHAI OFFICE Navig8 Shanghai: Representative Office 6
ASSET MANAGEMENT EXTENDING OUR COMMERCIAL PLATFORM AND EXPERTISE IN PARTNERSHIP WITH SHIPPING INVESTORS Spanning several shipping segments, Navig8 has created new companies, with substantial investor participation, that are poised to become substantive players in their chosen markets. Product Chemical Crude $6.0 billion portfolio US$ 6. BILLION IN ASSETS (US$3.2BIL NEW BUILDINGS IN KOREAN SHIPYARDS) US$1.235 BILLION EQUITY RAISED 3 X INVESTMENT VEHICLES 84 X ECO NEW-BUILD ORDERS WELL-TIMED INVESTMENT PROPOSITION UNIQUE PURE PLAY EXPOSURE TO SEGMENT NEW GENERATION ECO VESSELS STRONG TRANSACTION SPONSORSHIP KEXIM FINANCE OF CHEM N/B S ($260M) 7
SUPPLY: GROWING FRAGMENTATION 15% INCREASE IN NUMBER OF OWNERS DURING LAST 10 YEARS GLOBAL FLEET TOP 10 OWNERS SHARE VS. REST APPROX. 75% OF FLEETS HAVE FEWER THAN 10 VESSELS SHIP-OWNER APPROX. 2% AVERAGE SHARE OF GLOBAL FLEET BY EACH TOP 10 OWNER 79% Fleet comprising vessels 10,000 DWT+ Source: Clarkson s / Poten 8
DEMAND: SIGNIFICANT CONSOLIDATION CONCENTRATION OF CARGO OWNERSHIP; DEVOLUTION OF CONTROL TO REGIONAL OFFICES TRAFIGURA 56 OFFICES 36 COUNTRIES $128BN 2014 REVENUES VITOL 40 OFFICES 30 COUNTRIES $270BN 2014 REVENUES KOCH 80 OFFICES 60 COUNTRIES $115BN* 2013 REVENUES NOBLE 89 OFFICES 31 COUNTRIES $86BN 2014 REVENUES GLENCORE 90 OFFICES 50 COUNTRIES $221BN 2014 REVENUES CARGILL 76 OFFICES 68 COUNTRIES $135BN 2014 REVENUES OVER 700% INCREASE IN REVENUES DURING LAST 10 YEARS *KOCH: 2013 Revenue figure 2014 figure not disclosed 9
DEMAND: CONSOLIDATED DIVERSIFICATION TRADERS HAVE INVESTED BROADLY ACROSS THE COMMODITIES SUPPLY CHAIN Crude Oil LPG LNG Naphtha Biofuels Natural Gas Coal Steel Gasoline Electricity Carbon Fibres Methanol Base Metals Sugar Ethanol Easy Chemicals Minerals Feed Grains Vegoils 10
RESULT: INEQUALITY OF BARGAINING POWER ISSUES FOR OWNERS: PROPENSITY TO BECOME PRICE-TAKERS, RATHER THAN PRICE-MAKERS LIMITED CAPACITY TO OFFER VALUE-ADD THAT ATTRACTS A REVENUE PREMIUM LOWER LONG-TERM AVERAGE RETURN ON INVESTMENT CONSTRAINT ON FLEET GROWTH PERPETUATES IMBALANCE SO HOW DOES THE PLAYING FIELD GET LEVELLED? CONSOLIDATION BUT HOW? M&A POTENTIAL LOSS OF STRATEGIC CONTROL S&P POTENTIAL LOSS OF ASSET CONTROL POOLING NO LOSS OF EITHER FORM OF CONTROL.. 11
POOLING: BENEFITS TO OWNERS 01 IMPROVE PERFORMANCE ADVANTAGE 12
SHIFTING TRADE CORRIDORS: VLCC A LARGE FLEET IS CRITICAL IN A WORLD OF EVER-CHANGING TRADE PATTERNS CHANGING TRADE IN THE PAST 10 YEARS: 10 YEARS AGO PRESENT DAY UKC KOREA USG AG CHINA CARIBS WAF SE ASIA GLOBAL PRESENCE IN VARIOUS TRADE ZONES KEY RELATIONSHIPS FACILITATE FLEXIBILITY
SHIFTING TRADE CORRIDORS: PRODUCTS A LARGE FLEET IS CRITICAL IN A WORLD OF EVER-CHANGING TRADE PATTERNS UKC MED CHANGING TRADE IN THE PAST 10 YEARS: 10 YEARS AGO PRESENT DAY USG AG WCI CHINA FAR EAST GLOBAL PRESENCE IN VARIOUS TRADE ZONES KEY RELATIONSHIPS FACILITATE FLEXIBILITY
POOLING: BENEFITS TO OWNERS 02 RISK DIVERSIFICATION 01 IMPROVE PERFORMANCE ADVANTAGE 15
RISK DIVERSIFICATION NAVIG8 POOLS - 2014 SEGMENT & TOP 15 CHARTERER REVENUE ANALYSIS Dry Bulk 12% Products 15% Crude 48% Chems 25% COUNTERPARTY OVER 1,000 CUSTOMERS, BUT HIGH-QUALITY CASHFLOW CONCENTRATION TO LEADING ENERGY MAJORS AND GLOBAL TRADERS EMPLOYMENT THOUGH PRIMARILY SPOT, POOL TCE PAID MAY ALSO COMBINE COA AND TC REVENUES 16
POOLING: BENEFITS TO OWNERS 02 RISK DIVERSIFICATION 01 IMPROVE PERFORMANCE 03 FLEXIBILITY & SERVICE ADVANTAGE 17
FLEXIBILITY OF SERVICE Crude Gasoil Mogas Jet Naphtha Molasses Limestone Palm Caustic Grains Lubes Coal MTBE Fuel Oil Vegoil Biofuels Bauxite GLOBAL PRESENCE SIZE DIVERSITY 18
POOLING: BENEFITS TO OWNERS 02 RISK DIVERSIFICATION 01 IMPROVE PERFORMANCE 03 FLEXIBILITY & SERVICE ADVANTAGE 04 MARKET INTELLIGENCE 19
MARKET INTELLIGENCE BEING PART OF A LARGER FLEET PROVIDES ACCESS TO ENHANCED INFORMATION FLOW 350 300 250 200 150 100 50 0 NAVIG8 OVERVIEW: 16 POOLS 7 TANKER; 5 CHEMICAL; 4 DRY BULK 54 POOL MEMBERS FROM 18 COUNTRIES 232-VESSEL OPERATIONAL FLEET, PLUS COMMITMENTS INCLUDING: GENER8 MARITIME 21 VESSELS (42 IN TOTAL) NAVIG8 PRODUCT TANKERS 27 VESSELS NAVIG8 CHEMICAL TANKERS 26 VESSELS 11 17 21 30 35 37 43 46 40 39 37 38 42 50 59 63 64 69 73 76 78 79 83 91 92 96 98 106 107 105 110 50 5 58 62 63 63 TANKER CHEMS BULK 11 21 26 29 40 46 65 67 66 63 49 66 121 52 74 57 89 56 63 95 98 131 131 137 138 65 98 149 65 93 164 EACH VESSEL IS A SUBSTANTIAL SOURCE OF INFORMATION FLEET SIZE SUPPORTS GEOGRAPHIC EXPANSION, DIVERSIFICATION & ECONOMIES OF SCALE ANALYSIS OFTEN YIELDS VALUABLE INFORMATION HIDDEN IN DIFFERENT SEGMENTS Fleet size aggregates i) operational vessels and ii) ships committed to join Navig8 pools (from date of contract) Weighted according to proportion of relevant quarter in which vessel enters, or is committed to, a pool. 20
POOLING: BENEFITS TO OWNERS 02 RISK DIVERSIFICATION 01 IMPROVE PERFORMANCE 03 FLEXIBILITY & SERVICE ADVANTAGE 04 MARKET INTELLIGENCE 05 TRANSPARENCY 21
TRANSPARENCY: POOL ENTRY & REPORTING RECOGNISING THAT THE FOUNDATIONS OF SUCCESSFUL POOLING ARE TRUST, TRANSPARENCY AND ACCOUNTABILITY POOL ENTRY: VESSEL EVALUATION SYSTEM APPLIED CONSISTENTLY TO ALL VESSELS ENTERING POOL VES ENSURES VESSELS REWARDED FAIRLY FOR CONSUMPTION & TRADING FEATURES VES REVIEWED ANNUALLY AND APPROVED BY POOL MEMBERS VESSEL PERFORMANCE REVIEWED REGULARLY CONSISTENTLY FAIR TCE DISTRIBUTIONS POOL REPORTING: FREQUENT AND HIGHLY DETAILED REVENUE AND COST REPORTING RANGE OF REPORTS & COMMENTARIES PROVIDES ACCESS TO MARKET INFORMATION FLOW 24/7 ON-LINE ACCESS TO MARKET/POOL REPORTS POOL REPORTS DISTRIBUTION REPORTS VOYAGE PERFORMANCE REPORTS MARKET COMMENTARIES 22
POOLING: BENEFITS TO OWNERS 02 RISK DIVERSIFICATION 01 IMPROVE PERFORMANCE 03 FLEXIBILITY & SERVICE ADVANTAGE 06 CREDIT FACILITIES 04 MARKET INTELLIGENCE 05 TRANSPARENCY 23
CREDIT FACILITIES CONVERTING MARKET OUTPERFORMANCE INTO PROMPT CASH DISTRIBUTIONS TO OWNERS 100% 90% L12M 80% 70% 60% 50% 40% 30% 20% 10% 0% Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 PRE-CREDIT FACILITY Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 POST-CREDIT FACILITY Apr-14 Oct-14 MONTHLY DISTRIBUTIONS DEPENDENT ON CASH RECEIPT FROM POOL FLEET ACTIVITY CREDIT FACILITIES MONTHLY TCE DISTRIBUTIONS UP BY 25% TO 96%* (L12M) NAVIG8 OPERATES OVER $200M IN RECEIVABLES LINES TO SUPPORT DISTRIBUTIONS *Chart & figures taken from Navig8 s MR Pool 24
POOL MEMBERS ROSS CHEM NAVIOS MARITIME FinnFleet EGYPTIAN TANKER COMPANY 25
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