The Industrial and Commercial Bank of China (ICBC) has introduced a new financial instrument to help finance newbuildings that can be bareboat chartered to shipping companies, with the financing coming from private investors.
The new method has been applied in a deal between a Chinese state-owned shipbuilder and an overseas bareboat charterer, Xu Li, vice-president of ICBC’s Shanghai Branch, told the Asia Shipping Fortune Forum 2015 on 21 May.
The term of the financing is set at 12 years, according to ICBC.
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ICBC has set up a private equity fund and encourages private investors to finance newbuildings through ICBC Asia Investment Management, a subsidiary in Hong Kong, taking the newbuilding financing debts off ICBC’s balance sheet, Xu said.
The private equity will then acquire the entire stake in a special purpose vehicle that owns the newbuilding.
The advantage of this method is that ICBC can provide 100% financing for newbuildings, instead of only 90% in conventional methods, Xu added.