Billionaire Ross Says Diamond S Shipping IPO Pulled as Price Too Low

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March 12, 2014

Wilbur Ross, chairman and CEO of WL Ross & Company LLC. (c) REUTERS/Mike Segar

March 12 (Bloomberg) — Billionaire Wilbur Ross said an initial public offering for Diamond S Shipping Group Inc., the tanker company in which his firm is the largest shareholder, won’t proceed because the suggested price was too low.

The final proposal by the underwriters was not acceptable, the founder of WL Ross & Co. said in an e-mail yesterday. Diamond S won’t issue shares at a price equivalent to less than the market value of its fleet, he said. The company filed to sell 14 million shares in a range of $14 to $16 each, and was scheduled to price the IPO on March 11.

“Diamond S does not need the money and will not issue stock at the relatively unfavorable price created by the present stock market environment,” he said in the e-mail. “We are not opposed to being publicly owned but not at any price.”

Richard Khaleel, a spokesman for New York-based Jefferies Group LLC, which had been leading the offering, declined in an e-mail to comment. Nobody responded to a phone message left outside normal business hours yesterday at the headquarters of Greenwich, Connecticut-based Diamond S.

The shipping company, which owns 33 tankers for carrying refined fuels, planned to use the proceeds of the IPO to contribute to the purchase of 10 new ships, according to its prospectus. Other shareholders include First Reserve Corp. and a unit of Cargill Inc., the commodities trader, its website shows.

Predicted Recovery

Ross and his co-investors spent about $900 million on 30 product tankers in 2011, he said in August of that year. It was the 76 year-old billionaire’s first venture into shipping and he also predicted at the time a slump in tanker returns was ending.

Earnings from vessels of a similar size to those in Ross’s fleet averaged $12,391 a day last year, the highest since 2008, according to the Baltic Exchange in London. The price of five- year-old tankers rose 1.4 percent to $28.9 million since September 2011, the bourse’s data show.

Ross has a 42 percent stake in Navigator Holdings Ltd., which controls the world’s largest fleet of handysize liquefied- gas carriers. Shares rose 21 percent to $24.13 since the company’s IPO in November. Ross and partners last year raised $100 million to buy as many as eight ships hauling coal, iron ore and grains through a company called Nautical Bulk Holdings Ltd., he said in November.

Private equity firms last year invested the most since at least 2008 in shipping, according to Marine Money, an industry researcher and publisher.

In December, Ross postponed an IPO for International Automotive Components Group SA, an auto supplier, two people with knowledge of the matter said at the time.

– Isaac Arnsdorf and Leslie Picker, Copyright 2014 Bloomberg.

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