HAPAG-LLOYD IPO

Freight Investor Services LEADING THE WAY IN FREIGHT AND COMMODITY DERIVATIVES

Weekly Commentary Oct 30th, 2015 Hapag-Lloyd fails to float on time. Rates from Asia to North West Europe jumped a whopping $757 to $988 per TEU on the back of the November 1st GRI, representing the highest level on the route for 13 weeks. With capacity adjustments seemingly supporting the latest increase, including the idling of a Maersk Triple-E vessel, the extent of the customary post-GRI declines is a little uncertain at this stage. Despite the latest increase, rates still remain 25% lower than the same period of 2014. In fact, weekly rates on the route haven’t been above their corresponding period of 2014 at any point this year, reflecting the fundamentally poor market conditions. Elsewhere this week saw the news that Hapag-Lloyd has both delayed and lowered its IPO offer price due to what it calls continued market volatility. Previously the German line had announced plans to offer shares in the region of EUR 23-29 per share, however this has subsequently been lowered to EUR 20-22. This is on top of lowering its proceeds target by 40% to USD 300m, having previously planned to raise USD 500m when the IPO was first confirmed in September. The downgrade may well be a reflection of nervousness from investors following the announcement from Maersk Line downgrading its full year underlying forecasts by some 30%. It looks like the timing of the announcement from the Danish carrier has been somewhat unfortunate for Hapag-Lloyd. Trading of the Hapag-Lloyd shares on the Frankfurt Stock Exchange is now expected to commence on November 6th, pushed back from the initial float date of October 30th. Last week also saw the announcement from the Baltic Exchange that it will launch its very own container freight index, based on transacted rates executed on Ningbo’s e-trading platform. The index will cover rates ex-Ningbo to both European and Middle Eastern destinations and will be published weekly every Friday at 4:00pm Beijing time. US container trades also saw an increase this week, although not of the same magnitude as in the European  trades. Rates to the USWC jumped $197 to $1,363 per FEU, although still remain 31% lower than the same period last year.