Everything Emanuele Lauro touches seems to turn to gold.
But even for someone with the Midas touch who has raised well over $2bn in the past couple of years, the mundane realities of life intrude. He still struggles to find a parking space for his Mercedes SUV in Monaco's elegant Fontvielle Port, as TW+ discovered when we visited to talk about the stellar year for his Scorpio Group.
Such frustrations cannot knock shipping's dealmaker of the moment from his stride, however. Fresh from stunning the market with orders for 54 "eco" product tankers, Lauro and his team have gone on to order (at last count) 36 ultramax and Kamsarmax dry-bulk newbuildings, 11 VLGCs and in recent weeks - to top it all - five VLCCs.
Fuelled by a US stock-market boom and confidence in a shipping market recovery, the Scorpio Group has spawned two publicly quoted vehicles: Scorpio Tankers and Scorpio Bulkers, and who would bet against more.
It would be tempting to paint Lauro as a big, buccaneering young shipowner, recklessly frittering away inherited family wealth. But it would be wrong. He certainly has always been a "big shipowner", he jokes - but only on account of being well over six feet tall. And, yes, he is young, turning 35 just before Christmas. But no, he insists, he's not reckless, and does not see himself as a "traditional" owner.
"I am not a shipowner. I come from a shipping family, but I am not a shipowner. I am a manager of a shipping company. I work for my shareholders," he says of the lessons learned from 11 years in the shipping business of the 21st century. However, if his plans work out, he will nevertheless secure his place as a major "shipowner" in many people's eyes.
Despite his youth and business aggression, Lauro wins plaudits from the old guard in Monaco, where his family's businesses have been based since 1984, when his grandfather, the legendary traditional shipowner Glauco Lolli-Ghetti, retreated from New York.
"Emanuele's not only very smart, I've always found him a very genuine guy," says a senior Monegasque shipping source. "He's approachable, he's responsive and he's clearly not a glory-seeker." He even wins the respect of local taxi drivers. "He's such a nice guy, although it's a bit disappointing he's now settled down, married with a kid," a (female) cabbie laments as we corkscrew through Monaco's streets.
He has earned credit too on Wall Street. "All the shipping companies that have accessed the capital markets in 2013 really have Scorpio to thank," says Jonathan Chappell, shipping equity analyst at Evercore Partners in New York. "Not only did Scorpio provide the blueprint to successful equity raises as the industry struggles to recover from the multi-year trough cycle, but it has brought shipping back into focus for US investors. Starting in early 2013, investor interest piqued and all they wanted to talk about was product tankers, 'eco' ships and Scorpio."
Chappell adds that although Scorpio Tankers is still an investor favourite, investors are looking for the next similar strategy and "broadening their interest to dry bulk, LNG/LPG and even crude tankers".
Such praise is pleasant, but would cut no ice with New York's investment elite unless it was backed by financial performance. So what has set this man apart?
Lauro admits he has been in just the right place at the right time. But it is clear his success has been founded on a ruthless deal-making streak alongside an astute understanding of the need to build a strong, trusting management team. Although willing to talk in private with candour and humour about how he was picked by Lolli-Ghetti from his 11 grandchildren to run the family shipping firm in 2003 at the age of 24, he refuses to recount the story for the record. Suffice to say, his grandfather saw a little of himself in the young Emanuele's colourful exploits.
He acknowledges that he came from a wealthy family, but by the time he took over, the family's great fleet had shrunk to just three 1988-built OBOs worth $20m to $25m. "I'm not saying I started from nothing. I was given a phenomenal opportunity by my grandfather, Mr Lolli-Ghetti. But everything I did, I did for myself. Whatever I built, I built, but I recognise that I started from a great place."
Dropped into the hot seat, he quickly realised Scorpio needed people with know-how. "As I said to Robert [Bugbee] the first time I met him: I need people with knowledge, experience, perhaps white hair. Then looking at him, I said: 'Or no hair!'" The balding Bugbee did not take offence, and is now Scorpio president.
"The best thing I have done in my career was realising 10 years ago, at 24 years old, that I was too young and inexperienced to run a company, no matter how big or small," Lauro says. "So I decided to eat some humble pie and look for skilful, knowledgeable and experienced people who would help me to reach my goals faster but also safer and better. It was not easy to attract talent with a very small fleet, but as the company grew, it became doable."
From that modest base, Scorpio steadily built a significant tanker-operating business from 2003 to 2008, with strong links to German partners such as Tobias Koenig, alongside the family's private businesses in dry-cargo logistics and port infrastructure in Indonesia and India.
But during the boom, Scorpio ordered no ships, Lauro says with pride. "We had 30 or so ships on time charter, we were making huge money for the size of company we were," he recalls. "When you manage 80 tankers, have zero debt and have no ships on order at the peak of the market, the platform is perfect for when the market corrects, which is exactly what happened."
The partnership with Bugbee is at the core of Scorpio's success. Alongside Bugbee are a slew of other former OMI staffers, including Cameron Mackey, Brian Lee, Olivier Faurisson and James Amis. This has earned Scorpio the modish title OMI 2.0 among financial analysts.
Spinning off the two public companies from the private family businesses has clearly been difficult at times. An inheritance passed down from Lolli-Ghetti to his four children and then 11 grandchildren has inevitably created a complex web of interconnected holdings and at times rival perspectives. Lauro declines to speak on the record about the issues that continue to arise.
The family still controls around 11% of Scorpio Tankers, as well as all of the private Scorpio Group.
Scorpio's success over the past three years has been built on a simple formula of low costs and offering investors a predictable return. As chief operating officer Mackey said last year: "We are trying to be consistent in an uncertain world, to execute in all areas better than our competition. The best we can do is to be boring yet generate more cash, more predictably, at every point in the shipping cycle."
Pivotal to delivering continued success is the ordering of high-specification vessels to serve promising trades from shipyards when prices have been at or near historic lows.
Critics sneer that it is all a huge web of orders to be "flipped" to other owners at higher prices on delivery. Some point to the recent deal to sell its 11 VLGCs to Dorian LPG. Lauro dismisses the criticism, and argues that the Dorian deal was simply an example of the group's ability to seize opportunities to make market plays.
Gas was always intended to be a target for Scorpio, driven by Bugbee's early years at Gotaas-Larsen and the technical skills of others in the team, but initially product tankers were more alluring. A fresh window opened at Hyundai and Daewoo shipyards in the summer with the Korean shipbuilders putting offers on the table. "We saw that in the space of six to eight weeks we had the chance to become meaningful in the LPG sector."
The near-$800m investment needed for the LPG vessels was not an obstacle, as Lauro was confident of shareholder support. "We had tested it. We are super-open with our shareholders. We constantly talk to them and bounce ideas to them, and we get their feedback. The support they have shown us has been extraordinary."
It is a style far removed from the at-times contemptuous attitude of some European shipping Wall Street debutants of a previous generation.
Having ordered the ships, Lauro needed to use his analytical skills to good effect to decide on the next move. "You have to be humble enough to say: This is a big play, let's see how to play it. If we wanted to get out and flip it, we could have done."
Asset prices had risen, and there was growing interest in the sector with the flotation of Avance Gas, BW Gas and Dorian LPG. "We could have played one against the other, to see who was the highest bidder, and just got out. Instead we were looking for a partner who could be instrumental in creating a proper play into this segment," Lauro reflects.
"Could we have done it ourselves? Probably yes, but it would have taken more time. Sometimes you just have to accept that if you have a stronger partner around, you just have to say: 'Let's do this wisely'.
"We absolutely did not go in there with the intention of flipping them. We do not consider having flipped them. Opportunities present themselves when they do. You either take them or not."
After spending much of the summer visiting LPG charterers, Scorpio sold the orders quickly to Dorian LPG in return for a 30% stake in that company. Lauro believes this secures Scorpio a strong place in the market, while analysts argue that it will generate a healthy dividend to shareholders.
Lauro understands that ensuring the firm's alignment with investor demands has been a key element in its success so far, demanding particular skills.
"If you enter the market at the right time, if you have low break-evens, there are different ways to return capital to shareholders. We are trying to run proper public companies from what was once a family business. We are clear in our mind who our shareholders are, and we cannot compromise. The vast majority of the company is owned by US investors, which is why I say I work for them."
Recent criticism by Morgan Stanley of Scorpio's commission payment structure incenses Lauro, not least because the huge US investment bank took Scorpio Tankers to Wall Street in the first place. "I was extremely upset, because the people who advised us to have that structure were Morgan Stanley and their lawyers when they took us public. So for them to now criticise it is completely out of order."
Lauro describes the fees as "at or below" market average and says the performance of its pools are higher than rivals'. "So we charge less and we return more, and we should feel guilty for it? I don't think so!"
The 1% S&P commission was customary when Scorpio went public. "It is arguable whether it adds value or doesn't add value. For me it does. We have teams of people flying to yards, to meetings, myself included. To me it is justified, but it was never done in a way that was milking investors."
Scorpio Tanker shares have risen since the row broke - and that puts a smile on his face. He points out that Scorpio Bulkers has subsequently raised $250m with the same structure, and then a further $600m from largely the same investors. "It shows that investors don't really care about it."
Unusually candid for someone in his position, Lauro is aware of the benefits of being open. "Of course you have to be careful and only say things you can say when you run a public company. But for me, you only have things to gain from being candid and open. There is nothing to hide. This is not a difficult business!"
Wouldn't some people in shipping find that a strange attitude? "A lot of people would," he shoots back dismissively.
Lauro is also dismissive of critics of eco-ships, arguing that he is simply investing in the latest models and contemporary designs. "A ship that was 52,000-dwt but is now 50,000-dwt, has optimised hull lines, an electronic-controlled engine - it will save fuel," he says. "Whether this is ecological or not is not the issue. The ship will consume less fuel at the same speed than before. It is not that aliens have come with this new technology. All this noise is from people who don't have - or don't want - exposure to this market."
Sniping from rivals who mutter warnings about recklessness is fuelled by a surface glance at the group's financial performance. Although Scorpio Tankers is set to break into profit this year, it has accumulated losses approaching $100m over the past four years as it scales up before taking delivery of the bulk of its fleet.
Lauro isn't shaken by the criticism, even seeming to welcome it. "We take this extremely seriously. We have been given this great opportunity. Now we have to deliver." He acknowledges the risks of taking delivery of so many ships, the demands of finding crews and shipmanagers capable of meeting the challenge.
"We've purchased ships that are fuel-efficient, at prices that are recognised to be at low values in the cycles. We have among the lowest break-evens in the industry. You hope for the best, but you prepare for the worst," he argues.
"We think the market is improving, we think the worst is behind us, and that the revolution in product tankers is going to allow this company to do very well. But if it doesn't - for whichever reason that is beyond anyone's expectations - we are prepared to navigate any market that we will have to face." Warming to his theme, he continues: "You don't want to be superstars. We want proper, solid people running things in a proper way."
Lauro doesn't believe that US stock markets inflated on the back of quantitative easing and the threat of rising interest rates hold excessive risks for shipping, bearing in mind limited bank lending has restricted owners who cannot tap public funds.
Perhaps the next driver will be the push from end-users and investors for further consolidation. "Oil majors/end-users want quality, scale and size, and investors want quality, scale and size. They want to be able to invest and disinvest flexibly and promptly, and this is why we have completely changed the approach."
Scorpio could play a role if consolidation among owners accelerates. "I think it is possible. I think it is very possible."
So where will Scorpio and its listed daughter companies go from here? Lauro has no plans to head off to the Greek islands. "I am 34 years old and I am not looking at retiring at 40. If God gives me health, I'm looking at being around a lot more. This is only the beginning, really.
"What we are looking at here is building a company that can service our customers for years, for generations to come. The asset play is always the perception of where money is made in shipping. But at the end of the day, if you are positioning yourself well, people can make money entering and exiting the stock, the company can return money to shareholders in the good times through dividends, and then if you have low break-evens, you can navigate through the down cycles."
He reiterates that they are not looking at building something and then "putting a nice bow on it and: Boom! Exit!" But he leaves the door open: "If a buyer comes with a solid offer at the peak of the market in three, four years' time, whenever that peak is going to be, and wants to buy us, then we will consider it.
"There is no plan, or short-term game. You always aim for the long term. If you are always playing in the short term, then you are always playing a defensive game. I always play offence - it's much more fun."
Glauco Lolli-Ghetti earned the nickname King Midas for his success, but the 1970s tanker crash took its toll. Some 40 years on, Lauro could be known as Prince Midas. But will his golden touch also be his downfall, as the myth foretells?
Scorpio's plans are clearly ambitious, but can also be judged relatively conservative. Only one thing is certain. Volatile shipping markets are bound to test the strategy to its limits at some point in the years ahead.
(This article appeared in the Winter issue of TW+ magazine)
