One of 2021’s biggest stories in ship finance was the New York initial public offering of Israeli liner operator Zim – the first successful mainstream shipping IPO in the US since 2015.

But shipping gained three new listed owners in New York during 2021, not one.

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While Zim came through the front door, the other two – OceanPal and Imperial Petroleum – stepped through an effective back portal to public listings. They were spin-offs of existing public shipowners: Diana Shipping and StealthGas, respectively.

After a stumbling start to its public life – Zim priced and initially traded poorly – the Israeli company became the biggest success story among all New York shipping listings, with an 11-month share appreciation of 325%.

OceanPal and Imperial didn’t surface until November, but their trading so far is not going to remind anyone of Zim.

OceanPal rocketed from $3.56 to its record high of $12.09 in its first hours of trading on 30 November, but has been in steady decline since and reached its low ebb of $1.50 in recent days.

This came after the Diana spin-off disclosed on 13 January that it was making its first public offering of stock. The sale of 7.4m shares at $1.95 each would yield proceeds of $14.5m, according to offering documents.

OceanPal wound up selling 15.7m shares at $0.77 each for gross proceeds of $11.9m, sending the stock plunging 48% to $0.61 per share in Friday trading.

OceanPal would get no proceeds from the combined 1.78m shares being cashed out by chairwoman Semiramis Paliou and interim chief financial officer Ioannis Zafirakis.

There are some similarities in the trading of Imperial Petroleum. The tankers spin-off hit its high point of $8.30 in the first hours of trading on 6 December and has fallen to its record low of $1.81 on Wednesday.

The Maxim effect

Imperial has now joined OceanPal in seeking to sell shares, saying in a regulatory filing on Thursday that it would sell 5m units consisting of one common share and a Class A Warrant. Imperial estimated it would raise between $8.9m and $10.3m, depending on the degree to which underwriters will exercise their purchase option.

Both OceanPal and Imperial are represented in their fundraising efforts by Maxim Group – the same investment bank that has helped smaller listed owners like Castor Maritime, Globus Maritime and Seanergy Maritime Holdings grow their fleets through a series of oft-dilutive equity raises that packaged shares with warrants.

OceanPal likewise is packaging shares with warrants in its fundraiser.

One of Zim's selling points was and is its scale. Though it is more of an operator than a shipowner – it owned only one ship at the time of its IPO and had nearly 70 chartered in. Its continued growth and record 2021 earnings have pumped up its market capitalisation north of $7bn.

Semiramis Paliou, chief executive of Diana Shipping, is also chairwoman of spin-off OceanPal. Photo: Diana Shipping

This is the type of scale larger investors like mutual funds look for in shipping investments. It is supposedly the way forward for public shipowners, whether seen through Zim in container ships, or others like dry bulk owner Star Bulk Carriers and its market cap of $2.1bn or tanker owner Euronav with a total share value of $1.8bn.

IPOs for owners with 10 ships or fewer supposedly are done for good; it's so 2005. That's unless, apparently, they come from a direct listing – another IPO back door – or a spin-off a la OceanPal with three older bulkers or Imperial Petroleum with four tankers.

OceanPal's market capitalisation is about $13m. Imperial Petroleum's is about $8.5m.

Both have said they aspire to get bigger. Both parent companies have stated rationales for their launches: a play on older bulkers and spot rates for OceanPal, or a split that allows StealthGas to become a pure-play LPG carrier fleet for Imperial.

Some analysts question privately whether the OceanPals and Imperial Petroleums of the sector are good deals for shareholders, or just the parent companies, which continue to earn management fees on the fleets.

Are they scrappy upstarts who should be praised for finding an innovative path to growth? Or just eye-rolling end-runs around capital-markets best practices that help shipping remain a briar patch for investors.

Either way, like the Zims of the sector, they move forward with a public listing.

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