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J.P. Morgan Asset Management has raised $480 million – $80 million more than the targeted amount – for investment in modern shipping industry vessels, the company said Monday.
The fund is looking to invest in vessels operating in shipping sub-sectors that are experiencing substantial distress, and has already invested $312 million – 65 percent of total capital – through the acquisition of 14 assets, according to J.P. Morgan.
Anton Pil, managing partner at J.P. Morgan Global Alternatives, said investors were interested in the new fund because shipping is among the few struggling sectors with cheap assets.
“With an estimated $4.5 trillion-plus in capital required to finance global transportation assets over the next 10 years, this is a large-scale and wide-ranging investment opportunity,” Pil explained in a statement. “Institutional investors, seeking uncorrelated and high relative value returns, have discovered this growing, sustainable opportunity to own and lease tangible assets that form the foundation of our interdependent global economy.”
The latest capital commitments were raised through a J.P. Morgan Asset Management global maritime investment fund from a broad range of international institutional investors including, pension plans, insurance companies, and endowment and health care entities, the firm said.
The distressed shipping investment is part of a broader transportation capital obligation, which J.P. Morgan says has intensified following the departure of traditional funding sources like banks from the sector.
J.P. Morgan Global Alternatives Head of Global Transportation Andy Dacy said shipping investors are capitalizing on an opportunity to acquire quality assets at very favorable prices.
“Our established and dedicated transportation investment team with an extensive industry network has been able to acquire vessels at distressed purchase prices, achieving opportunistic-level returns with unlevered cash-on-cash yields averaging eight percent, even in what is a historically low charter rate environment,” he said.
J.P. Morgan Asset Management currently has $1.26 billion in institutional client capital dedicated to the transportation industry, according to company figures.