December 2008 / January 2009 - Association of Dutch Businessmen

November Review
Pareto
is different from
competitors in that
it offers ‘packaged’
solutions both
from an acquisition
perspective
as well as a
corporate finance
perspective.
Services are
aimed to build
the company’s
balance sheet in
every stage of
its development
backed by shipbroking
activities.
The goal is to
increase company’s
entreprise value
by offering equity
and debt finance
solutions, and
additionally, to
provide aftermarket
services
for companies
with publicly listed
securities.
balance sheet in every stage of its development backed by ship-broking activities. The goal is to increase
company’s entreprise value by offering equity and debt finance solutions, and additionally, to provide
after- market services for companies with publicly listed securities. Aftermarket services include equity
research to improve market awareness and thus promote liquidity in coherence with securities brokerage.
Pareto’s Private Equity division in Singapore is active in sale-and-leaseback transactions, much like the
Dutch CV system and the German KG system, but it is not tax-driven.
The structure works under a so called “Kommandittselskap” which is a Norwegian Limited Partnership
that has the attraction of limited liability for its limited partners. The structure is essentially that of
an operating lease, whereby the effective operating lessor is a group of Norwegian investors generally
consisting of:
Participants: Domestic and international investors from the public that own around 55% - 75% of
the share capital.
Commercial Manager: Normally owns 15% - 35% of the shares in the KS. The role of the commercial
manager will be to ensure the charterer’s obligations under the bareboat / time charter, supervise any
inspection of vessels and records, and assist the KS in maximising shareholder value.
General Partner: (Usually owned by the commercial manager) owns up to 10% of the KS and
has unlimited responsibility for the company’s engagements, unlike the other participants whose
responsibilities are limited to their invested capital.
As the Business Manager (Pareto) provides Investor Services; the business manager will look after the
company’s interests towards the lenders and shareholders, prepare tax information for the participants
and the company, prepare annual reports, organize board meetings and general meetings, in addition
to maintaining a secondary market for the shares.
One of the interesting features of the KS system is that there is an active stock market in KS
Shares, allowing investors to diversify their exposure to the shipping market into various sectors. For
instance, an investor can own 1/60 of a product tanker and 1/80 of a Panamax bulk carrier and trade
these exposures actively. This makes the shares freely tradable and adds to the attractiveness to invest
in such a scheme. The structure is shown below:
Effective Operating Lessor
Commercial
Manager
100%
General
Partner
15%
Participants
75%
10% Shipowning
SPC
100%
Charterer /
Guarantor
Bank Finance
Biz Manager
(Pareto)
Technical
Manager
With a case study of the the Middle East Tanker transaction described, Hans lined out the whole
spectrum of advice from Private Placement, Ship Broking, Corporate Advisory and Debt Arranging services
that Pareto can offer.
Vol.18 • No. 10 • December 2008 / January 2009