Follow the Money -II Session · 25 Largest Global Shipping Banks Portfolios in May 2015 : Us $ 334.9 bn Increase from 2008 Decrease from 2008-41.0 -30.1 -18.0 -50.0-40.0-30.0-20.0

Follow the Money - II Session Fabrizio Vettosi

October 2015

… trying to cure the bear

-

5

10

15

20

25

30

35

40

45

-

5,000

10,000

15,000

20,000

25,000

30,000

2010-09 2011-09 2012-09 2013-09 2014-09 2015-09

$ M

illion

$/D

ay

1 Year Timecharter Rate 75,000 dwt Bulkcarrier Panamax 76K Bulkcarrier 5 Year Old Secondhand Prices

$/M

illi

on

$/M

illi

on

$/D

ay

$/D

ay

35 25,000

Tanker

Bulk

2

-

5

10

15

20

25

30

35

-

5,000

10,000

15,000

20,000

25,000

2010-09 2011-09 2012-09 2013-09 2014-09 2015-09

$ M

illion$

/D

ay

1 Year Timecharter Rate 47-48 K dwt Modern Products Products D/H 47K Dwt 5 Year Old Secondhand Prices

$/M

illi

on

$/M

illi

on

$/D

ay

$/D

ay

… trying to ride the bull

Tanker

29.0

20.1 20.0 18.9 18.5 17.5 17.0 15.8 15.1 14.7 14.0 13.5 12.4 12.0 11.0 11.0 10.5 10.0 9.9 8.5 8.3 8.26.5 6.5 6.0

-7.0

-0.6

0.5

-1.2

0.5

4.4 1.5 1.0

3.4

-3.0 -1.8 -1.7

1.5

-10.0

0.0

10.0

20.0

30.0

40.0Increase from 2008

Decrease from 2008

BANKS: Reduction in Global Shipping Bank’s Capacity

25 Largest Global Shipping Banks Portfolios in May 2015 : Us $ 334.9 bn

Increase from 2008

Decrease from 2008

-41.0

-30.1

-18.0

-50.0

-40.0

-30.0

-20.0

3

… in 2015 the portfolio decreased by 23 Billion$ !!!

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013

BANKS: Margin Paid by Borrowers 2005-2014( BPS)

2005 2006 2007 2008 2009 2010 2011 2012 2013

<100 100-199 200-299 300-399 400-499 Average Spread

4

Source : Marine Money-Eurofin

Comments

�Some Largest shipping Banks walked away from the

industry

� Less Banks, Less money to high rated shipowners

… In 2015 Chase after the Shipowners

… In 2008 Chased after the ShipownersBANKS

5

…Future?

Traditional Banker or Investment

Banker ?

Shipping Equity Capital Market Transactions 2015

500

1000

1500

2000

2500

Underwriting 2015 = 2.2bn $

EQUITY CAPITAL MARKET:

6

0

Tanker Dry ChemicalTankerTanker = = 1.4bn1.4bn $$

64%64%

Dry Dry = = 0.7bn0.7bn $$

36%36%

Source : Pareto

010/2010

IRR15

20

25

Stock

Pri

ces

$

STOCK MARKET PERFORMANCE:Tanker

Investment

start exit

10/2015

TOTAL RETURNDVD Included

IRR(yearly basis):

+3%

0

5

10

08

/10

/2010

08

/01

/2011

08

/04

/2011

08

/07

/2011

08

/10

/2011

08

/01

/2012

08

/04

/2012

08

/07

/2012

08

/10

/2012

08

/01

/2013

08

/04

/2013

08

/07

/2013

08

/10

/2013

08

/01

/2014

08

/04

/2014

08

/07

/2014

08

/10

/2014

08

/01

/2015

08

/04

/2015

08

/07

/2015

08

/10

/2015

Stock

Pri

ces

$

7

Source: VSL on Bloomberg Data

15

20

25

Stock

Pri

ces

$

STOCK MARKET PERFORMANCE:Bulk

Investment

start

10/2010

exit

10/2015

IRR

TOTAL RETURNDVD Included

0

5

10

08

/10

/2010

08

/01

/2011

08

/04

/2011

08

/07

/2011

08

/10

/2011

08

/01

/2012

08

/04

/2012

08

/07

/2012

08

/10

/2012

08

/01

/2013

08

/04

/2013

08

/07

/2013

08

/10

/2013

08

/01

/2014

08

/04

/2014

08

/07

/2014

08

/10

/2014

08

/01

/2015

08

/04

/2015

08

/07

/2015

08

/10

/2015

Stock

Pri

ces

$

8

Source: VSL on Bloomberg Data

IRR (yearly basis):

-17%

0,96x

0,86x 0,83x0,76x

0,71x0,65x

0,50x

0

0,2

0,4

0,6

0,8

1

1,2

Diana DS Norden Golden Ocean

Eagle Bulk Star Bulk Scorpio Genco

EQUITY CAPITAL MARKET:

Current P/NAV of peer group

P/NAV<1

9

0

0,5

1

1,5

2

Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15

DS Norden Diana Shipping Golden Ocean Star Bulk

Buy AssetsBuy Assets

Buy Buy SharesShares

Historical P/NAV of dry bulk companies

Source: Pareto

PRIVATE EQUITY:…high expectations low results

Private-Equity

10

“Private-Equity Funds Bet $5 Billion on Shipping Rebound”

(source: Bloomberg Feb 18 2015)

Private-Equity

Existing Orderbook Value

3%=

7.75%

3.60%

4.73%4.81%

7.95%

5.33%

6.26%

5.38%

7.49%

6.01%

5.00%

6.00%

7.00%

8.00%

9.00%

500

600

700

800

900

1000

BOND MARKET:In 2015, the shipping sector raised 1.4 bn $

Average Shipping Bond

= 5.93%3.60%

0.00%

1.00%

2.00%

3.00%

4.00%

0

100

200

300

400

Shipping Bond Return Us Tresury Return 5 Years Avarage Shipping Bond

11

Us Tresury Return

= 1.94 %

Source: Bloomberg

Year 2007 2008 2009 2010 2011 2012 2013 2014

Bank Loan 92 83.6 33 54 51 40.7 56 44.6

Bonds 12 4 7.5 19 16.7 22 12 15.3

Leasing 6.7 4.8 0.5 0.5 1.5 1.7 2.3 0.1

Shipping Capital Raised (USD Billion)

Capital Sources Trend (2007-01.12.2014)

From 69% to 63% out of Total Sources

FINANCIAL MARKETS:

12

Leasing 6.7 4.8 0.5 0.5 1.5 1.7 2.3 0.1

Ipo 18 0.7 2.2 2.2 7.7 1.1 1.8 2

Follow On 4.5 4.1 3.4 4.7 1.7 2.4 4 3.5

Private Placement 1.2 0.8 0.1 0.8 6.4 0.6 4.7 1.2

Private Equity 0 1 0.6 1.9 4.3 2.9 7.4 3.3

Total Capital 134 99 47 83 89 71 88 70

Bondsfrom 9% to 34% out

of Total Sources

Source : Marine Money 2015

SUMMARY

.. so as of today the situation is:

BANKS:Half Walked Away. Market Dried and Selective

EQUITY CAPITAL MARKET:Half Closed. P/Nav < 1 “Sell the ships and buy the shares”

PRIVATE EQUITY:

13

PRIVATE EQUITY:Open only for bullish sectors (e.g.Tanker)

BOND MARKET:Enjoy the window due to the drop of sovereign debt yield. Attracting Patient Investors (e.g: Insurance, Pension Fund, etc.)

Shipping Yesterday:Asset Based

Shipping Tomorrow:Knowledge

Management

14

ManagementSkills