Mitsubishi Plans $750 Million Private-Equity Shipping Fund

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March 6, 2013

(Bloomberg) — A Mitsubishi Corp. subsidiary plans to seek $750 million for a fund managed by former General Electric Co. shipping-team members that will try to take advantage of depressed prices in the industry.

MC Seamax Shipping Opportunities Fund will acquire and manage 25 to 35 container ships for lease to liner companies, according to a marketing presentation, a copy of which was obtained by Bloomberg News.

The strategy offers “significant” capital-gains potential as vessel oversupply corrects, demand continues to grow and buyer competition remains low, according to the Mitsubishi arm, Stamford, Connecticut-based MC Asset Management Holdings. Container-ship values are approaching 25-year lows, the presentation shows.

Scott MacDonald, a senior managing director at MC Asset Management Holdings, didn’t respond to an e-mail and phone call seeking comment.

The fund will be run by Cao Deambrosio and Ron Petrunoff, who work together as shipping consultants at Seamax Partners. Deambrosio was previously head of shipping at GE Capital, the middle-market finance arm of General Electric, where he worked for 15 years. Petrunoff was president of GE’s transportation finance business.

Mitsubishi will commit $50 million to the fund and provide a $50 million debt warehouse facility while the fund is raising capital, according to the presentation.

Higher Hurdle

The fund offers a higher preferred return hurdle, 12 percent, to investors who commit before a first close. After that, the preferred return is 10 percent. Private-equity funds must typically meet certain return thresholds, known as preferred returns, before general partners can partake in any of the profits. The new fund will charge a 1.25 percent management fee on committed capital and 20 percent carried interest, or the cut of profits to the general partner.

The firm can lever the fund with as much as a 60 percent loan-to-value ratio, using debt to amplify returns, according to the presentation.

MC Asset Management Holdings is focused on real asset strategies that intersect with the core businesses of Tokyo- based Mitsubishi, Japan’s largest trading company. Mitsubishi has $137 billion in assets, the documents show.

– Sabrina Willmer, Copyright 2013 Bloomberg.

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