At the helm of LR's globally expanding Management Consulting and Investment Advisory division is Ambrish Bansal, who brings a decade of experience from leading management consultancy firms including KPMG and Accenture Consulting. Just over five years ago, LR brought him on board to establish the classification sector's first multidisciplinary business consultancy division—a venture that has since proven to be a remarkable success.
"Our clients seek advisors who understand industry and business challenges. LR's combination of deep industry knowledge, technical expertise, and business consulting capabilities, makes us unique in the market, says Bansal. "If a potential client requires a techno-commercial environmental due diligence exercise before financing or acquiring an asset or company, we come in and help them across the board—including technical, commercial, operational, environmental, legal, and ESG due diligence."
A unique position in the market
What sets LR's Investment Advisory apart is its deep-rooted understanding of the maritime industry, combining maritime technology expertise, commercial marine business acumen, logistics knowledge, and business consulting prowess. This unique combination is attracting clients across the management, operations, and finance sectors of rapidly evolving global logistics and transport supply chains—many extending well beyond traditional shipping.
With a team based in different locations (India, Middle East, UK) but serving clients globally, Bansal has developed a service that connects LR's 260-year heritage in classification with cutting-edge business advisory services. India serves as an ideal base not only for its strategic location between key markets in Asia and the Middle East, but also for competitive cost structures that have helped establish the new service offering.
"We are not competing with other classification societies on this sort of business," Bansal points out when discussing techno-commercial projects. "We are up against international management and strategy consulting firms.
Serving the financial sector
The division's clientele reads like a who's who of global finance, including multilateral development banks and large commercial banks across Asia, the Middle East, Europe, and the US, as well as Exim banks from various nations. Financial institutions seeking guidance on ESG governance and major maritime and energy companies pursuing decarbonisation and sustainability initiatives are increasingly turning to Bansal and his team for expertise.
One notable client is the African Export-Import Bank (Afreximbank), which engaged LR to provide advice on technical, commercial, and environmental due diligence as part of its credit assessment process for multiple vessel finance facilities. These projects have included acquisitions ranging from chemical tankers to platform supply vessels and bulk carriers for various African clients.
For these projects, LR evaluated and provided opinions on the financial, technical, commercial, market, and environmental aspects of the proposed credit transactions. A critical component included creating a risk register with detailed risk mitigation recommendations for all parties involved. The service also extends to annual reviews of vessel conditions, allowing LR to opine on potential risks to credit payment capability for the bank.
The critical role of due diligence
The importance of comprehensive due diligence cannot be overstated in maritime finance. According to Deloitte's M&A trends report, both corporate and private equity players consider due diligence (including target identification) as the single most important factor for successful transactions. Ironically, inadequate due diligence processes are also cited as one of the top reasons why M&A transactions fail to generate expected value.
This is where LR's expertise becomes invaluable. The Investment Advisory team provides deep strategic, technical, commercial, and operational insights to help clients navigate investment and divestment decisions, as well as undertaking market assessments and feasibility studies. Their services cover commercial, technical, and ESG due diligence, asset verification, post-merger integration, market sizing, process optimisation, and organisational assessment.
Advancing sustainability in finance
The rapid growth of sustainability-linked financing in the maritime sector represents another area where LR's advisory services are making a significant impact. In a recent project, LR was engaged by Precious Shipping Public Company Limited (PSL) to provide a Second Party Opinion (SPO) on their Sustainability-Linked Finance Framework for 2024.
LR performed an independent evaluation to ensure that sustainability-linked bonds or loans issued under this framework adhered to the criteria specified in the Sustainability-Linked Bond Principles by the International Capital Market Association, the Sustainability-Linked Loan Principles, and the ASEAN Sustainability-Linked Bond Standards.
This evaluation involved assessing the relevance, materiality and reliability of selected Key Performance Indicators, the ambition level of Sustainability Performance Targets, the reliability of benchmarks and baselines, and the credibility of strategies outlined to achieve these targets.
The result was the issuance of the first ASEAN shipping sustainability-linked bonds by PSL, amounting to 1.36 billion baht (US$40.48 million), backed by a guarantee from the Asian Development Bank's Credit Guarantee & Investment Facility.
Beyond traditional maritime finance
Bansal describes the division's projects as falling into three principal categories. First are conventional techno-economic due diligence projects that might include, for example, assessing the cost-benefit implications of energy-saving technologies like air lubrication or wind-assisted propulsion on vessels.
The second focus is on techno-commercial projects, such as when a Middle Eastern bank sought commercial due diligence on a regional offshore equipment and subsea company it was considering for investment. Another example involved a large Asian shipping group seeking techno-commercial analysis on adopting methanol as a carbon-neutral fuel across their fleet.
The third and rapidly expanding category involves ESG-related due diligence. Bansal cites an example of an Asian dry bulk owner with nearly 50 ships who wanted to refinance five vessels. The shipowner approached an international bank, and LR was retained in a tripartite arrangement to assess whether the shipowner's ESG strategy would meet the bank's sustainability criteria.
Looking to the future
As the maritime industry faces new challenges and opportunities, particularly in the areas of decarbonisation and sustainable ship recycling, LR's Investment Advisory division is well-positioned to guide clients through complex decisions. With upcoming environmental initiatives likely to be adopted following the IMO's Marine Environment Protection Committee 83 meeting, greenhouse gas emissions assessments across Scopes 1, 2, and 3 will cast a different light on global shipping's sustainability profile.
By combining deep maritime expertise with sophisticated business consulting capabilities, LR's Investment Advisory is helping to shape the future of maritime finance—ensuring that investments not only yield financial returns but also contribute to a more sustainable ocean economy.
