Public and Private Equity Markets

Abstract

The public and private equity markets constitute viable sources of ship financing alongside bank debt and other debt alternatives. Although a less traditional source of ship finance, the equity capital markets and private investors offer a plethora of opportunities as seen in Fig. 7.1, for both public and private shipping companies, albeit some solutions are more favored and applicable than others. As illustrated in Fig. 7.1, a private company may issue common stock in the public markets in a registered initial public offering (IPO), or they may choose to do an equity private placement. A public company may access additional capital in the public markets by pursuing a private investment in public equity (PIPE), a follow-on offering or through an equity-linked security such as convertible debt. Execution tactics are dictated by market conditions, investor appetite, structural considerations and trading dynamics. This chapter primarily focuses on the most relevant equity products available to private shipping companies with a particular emphasis on the benefits and drawbacks of being a public versus a private company, IPO structures and processes, as well as the role of private equity within the maritime sector.