Diamond S IPO pulled

Mar 14 2014

US-based investor Wilbur Ross has confirmed to Bloomberg that the initial public offering (IPO) for tanker concern Diamond S Shipping Group will not go ahead due to the suggested price being too low.

The final proposal by the underwriters was not acceptable, the founder of WL Ross & Co said in message to the news agency. Diamond S will not issue shares at a price equivalent to less than the market value of its fleet, he said.

The company filed to sell 14 mill shares in a range of $14 to $16 each and was scheduled to price the IPO on 11th March.

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

Investor enthusiasm for product tankers has slowed on growing concern that private-equity firms have ordered too many new ships, said Basil Karatzas, a shipbroker and adviser in New York to Bloomberg. Growth in the fleet of tankers could overwhelm demand to ship refined fuels and spoil a recovery in rates, he said.

Diamond S Shipping owns 33 product tankers and 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 commodities trader Cargill, the website said.

The 10 vesses were newbuildings orginally ordered by Metrostar, which had been sold to Dimaond S on the condition that the IPO went ahead to raise the purchase price.

It is not known whether this sale will now go ahead. 

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