Navios Maritime Acquisition today. Navios Maritime Holdings or Navios South American Logistics tomorrow?
The question of further consolidation within the complex web of companies led by Greek shipowner Angeliki Frangou was on the mind of one equity analyst during a conference call on Tuesday, but the Navios principal would not be drawn.
Veteran researcher Omar Nokta of Clarksons Platou Securities posed the question of further intra-group takeovers by Navios Maritime Partners, which was publicly presenting its pending all-stock combination with tanker-owning sister company Navios Acquisition.
"This is a [Navios Partners] call," Frangou told Nokta. "We will have an earnings call [for Navios Holdings]. We have over $4bn in assets over three segments. This is the shape of the company we like to have, the largest US-listed company."
Frangou, therefore, appeared to rule nothing either in or out, but it is still early days as the Navios Acquisition deal was announced only on 26 August and is not expected to formally close until the fourth quarter.
As TradeWinds has reported, Frangou created the largest US-listed shipowner by vessel numbers when Navios Partners — which owns bulkers and containerships — took over 45-tanker Navios Acquisition.
The deal also rescued Navios Acquisition from a November maturity deadline for $397.5m in ship-mortgage bonds.
It is the second activity in intra-group consolidation undertaken by Navios Partners this year, with the master limited partnership (MLP) having acquired Navios Maritime Containers in early January.
With the two deals, Navios Partners has grown into a 143-ship goliath with a presence in bulkers, containerships and tankers, a fleet worth an estimated $4.2bn and a combined market capitalisation of some $822m based on current share prices.
Nokta's question about Navios Holdings was not surprising in that the dry bulk shipowner has been pursuing efforts to address $896m in debt maturing on 1 March.
At the same time, its subsidiary Navios Logistics has tipped plans to pursue an initial public offering in the US and Brazil, but there is no guarantee those efforts will bear fruit.
For now, Frangou was far more interested in touting the virtues of her Navios Acquisition swoop, which Nokta has praised as creating "a conglomerate of sorts within the shipping sector" and "a proxy for global seaborne trade".
She answered a question from Jefferies lead shipping analyst Randy Giveans about how Navios Partners might balance future growth with growing its shareholder distribution — essentially the name for a dividend when paid out by an MLP.
Frangou counselled patience on the distribution front.
“We are just doing a $1bn investment today,” she said. “We need some time for the investment to work itself out.”
However, Frangou added that one advantage of the multi-sector approach is that Navios Partners will have the ability to make opportunistic acquisitions when a particular operating silo is facing distress.
Frangou said the enlarged company has initial leverage of around 35% and would like to see it even lower at 30%, but this can change based on market conditions.
"Shipping is cyclical — 30% in the good times can go to 50% in the bad. It's a balancing act," Frangou said.