London marine shipping services business to be auctioned

V Ships, the London-based shipping services business, is reportedly going to be put up for sale later this year with an estimated price tag of £500m. V Ships is the world’s leading third-party ship management company.

According to the Sunday Times, the Canadian owner of V Ships, Omers Private Equity, has indicated a preference for a trade sale over an IPO. Omers bought the company for £347m in July 2011.

V Ships is a highly cash generative company and the market demand for its services is not expected to diminish, according to a recent Moodys report that analysed the operations of the entire V Group. Last year Moodys upgraded the CFR (corporate family rating) of the group to B1 from B2.

Cost pressures on owners of smaller shipping fleets have resulted in an increase in outsourcing of operations. This is seen as positive for V Ships although, according to Moodys, the scope for increasing margins has a finite upside. V Ships holding company Vouvray Midco reported profits last year of £1.8m.

Over the past ten years, V Ships has expanded its reach with acquisitions in Singapore, Dubai and Norway, and management retain a stake in the business. Its sale will result in a large windfall for the successful Omers Private Equity, the buyout arm of Omers, one of the largest private pension plans in Canada.

Since GE Capital took a share of the V Ships back in 1993, the business has been quite the darling of the private equity world, having been passed around the sector many times. Owners have included Close Brothers Private Equity which acquired the company in 2003 for £95m. The pattern may well continue with Cinven and Permira believed to be frontrunners in the race for control of the shipping business.

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