J.P. Morgan Asset Management closed its Global Maritime Investment Fund II with $480 million in capital commitments from a variety of international institutional investors, including pension plans, insurance companies, and endowments.
The fund, which easily surpassed its target capital goal of $400 million, is among the largest dedicated shipping funds. It invests in vessels operating in shipping sub-sectors that are experiencing substantial distress, and where values are trading near historical lows, according to J.P. Morgan. The fund has already invested 65% of total capital, or $312 million, through the acquisition of 14 assets.
The distressed shipping opportunity is a small part of a more expansive transportation capital requirement, which has grown following the departure of traditional funding sources such as banks.
“With an estimated $4.5 trillion-plus in capital required to finance global transportation assets over the next 10 years, this is a large-scale and wide-ranging investment opportunity,” said Anton Pil, managing partner of J.P. Morgan Global Alternatives.
J.P. Morgan Global Alternatives is the alternative investment arm of J.P. Morgan Asset Management, and has more than $120 billion in assets under management.
However, according to a recent survey from law firm Norton Rose Fulbright, funding for the industry is expected to become increasingly scarce. The survey said bank debt is expected to remain the industry’s primary source of funding, followed by private equity and shareholders.
“Looking ahead to the next five years, just 22% believe that the availability of funds will increase, while 41% fear that funding will become more unobtainable,” said the survey. “In addition, respondents from the shipping industry are expecting lenders to take a tougher stance on problem loans, with 54% anticipating that enforcement actions will increase between now and 2022.”
Global political uncertainty, a global recession, and protectionism are the greatest threats to the shipping industry over the next five years, according to 28%, 25%, and 22% of those polled, respectively. At the same time, however, the survey also found confidence in the shipping industry appears to be improving, as 37% of respondents said that current market conditions are positive for the shipping industry, compared with 15% in 2016.