The IPO is intended to finance part of the acquisition cost of ten MR new-building vessels, currently under construction in Korea. The vessels will be delivered from September 2014 through January 2016. Diamond S has agreed to pay $380 million for the ten new-building vessels, and intends to raise $190 million, or 50% of the purchase price, in the upcoming IPO.
I have just started peering through the 206 page-long registration statement. I intend to follow-up with a complete analysis and valuation in the coming days. Until then, I would like to make the following observation:
The consortium of private investors led by WL Ross & First Reserve first committed $1 billion in equity to Diamond S Shipping Group in August 2011. The equity infusion was meant to finance the acquisition of the 30 MR tankers from CIDO, plus the construction cost of ten new-building vessels (eight Suezmax and two LR2 product carriers), that Diamond S had already ordered.
Those ten vessels, which have since been delivered to the company, are conspicuously absent from the upcoming IPO. Diamond S has decided to market itself as a pure MR play. Given the buzz surrounding medium range product tankers on Wall Street these days, I cannot blame them.