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Horizons article 07 September 2021

Infinity: The future of maritime finance?

  • Industry Viewpoint
Issue 59

The returns on shipping can be healthy, but the price of entry for investors can be steep. Until now, as John M Hadjipateras, Commercial Shipping CEO at Infinity Maritime explains.

The seed for Infinity Maritime was planted when some dyed in the wool maritime movers and shakers met a number of fintech and digital experts. The subject of conversation was the lack of bank debt available to small and medium sized operators (following the global financial crisis, the introduction of capital adequacy requirements for maritime loans has led to banks shying away from competitive lending), and the increasing imperatives for sustainability in light of the IMO’s commitment to net zero carbon shipping by 2050:

“It’s a challenging environment for maritime industry financing”

Traditional sources of finance are less available to small and medium sized operators, and new capital needs to come into the industry to help accelerate the development of newer, more sustainable technologies. Additionally, the preference for an increasing number of investors from institutions and private equity through to High Net Worth and Family Offices is for Green and ESG investments – as highlighted by the Poseidon Principles.

“How do we maximise operator performance and commercial yield?”

Often maritime operators have thrived on an opaqueness of transparency, which can act against the interests of investors in ships. Better governance will alleviate this. There is a rising paradigm within the industry of transparency in operations and supply chain, which are being solved by emerging technology companies. Charterers too are seeking enhanced operational efficiency and transparency as highlighted by the Sea Cargo Charter.

“What about the increasing environmental, social and governance (ESG) requirements?”

It’s clear that propulsion technology is lagging behind the sustainability imperative and targets, so investment in this area will accelerate as more alternatives to fossil fuels become available and commercially viable.

The discussion blossomed to an idea which would engage the whole maritime ecosystem – from operators to investors, brokers to charterers, classification societies to data analysts and everything in between, and drive the industry forward both commercially and sustainably, embracing emerging blockchain technology to make investment more accessible and trading a lot easier than other options.

Cue Infinity Maritime, the first platform to provide alternative maritime finance through digitisation enabling fractional ownership of commercial ships including tankers, bulkers and boxships, with an ambition to shape the future of maritime finance and enable broader access to large, attractive asset investment opportunities and more exit opportunities as conditions evolve for investors, through a secondary market. It’s already caught the eye of Lloyd’s List in it’s Top 10 in Ship Finance 2020, with some key innovations:

  • Digitisation through MetaUnits: Investors will receive easily tradable MetaUnits representing a fractional share in the value and profits of the fleet.
  • Sustainable fleet: Modern eco‑type ships uprated to the highest EEOI, CII and GHG ratings, securing revenues and residual values – in line with the Poseidon Principles.
  • MetaUnit liquidity: Trading liquidity will be delivered through a number of internal strategies and external partnerships.
  • Digital asset enhanced returns: MetaUnit holders benefit from secondary market (liquidity) commissions.
  • Independent governance: An independent Portfolio Asset Board will oversee the appointment of experienced and reputable managers, who will be monitored against recognised industry benchmarks, including ESG.
  • No requirement to service bank debt: the absence of leverage means vessel activity cannot be inhibited by financial considerations.

The COVID‑19 pandemic and the global credit crunch have created a perfect storm for the launch of the Infinity Maritime platform, initially focused on dry bulk. The global credit crunch combined with new banking regulations has caused a lack of finance available. Despite this, the pandemic has resulted in greater demand for bulk cargoes, as the global economy bounces back. This means bulk and project cargo potentially moving from handy size to larger size vessels due to increased demand and lack of available tonnage of the smaller vessels.

The platform is currently marketing the finance for its first vessels, one of which is a 2013 Japanese built dry bulk handysize with an estimated yield of 17.9%, as well as a newbuilding project in the niche short sea shipping sector, and has plans to grow a $2.5B fleet over three years.

LR support for Infinity’s vision.

As announced in August, LR will advise on vessel selection for Infinity Maritime though analysis of performance monitoring and emissions data. LR will also benchmark versus the market and provide future‑proofing for regulations with input from its I4 Insight platfrom and Maritime Decarbonisation Hub.

“We’re delighted to be partnering with Infinity Maritime to help bring this great new platform to market with a vision to deliver environmental benefits to the entire maritime ecosystem,” said Andy McKeran, LR’s Business Director for Maritime Performance Services.

Loading containers onto bulk carriers, safely and sustainably