Yildirim eyed Hapag
Turkish industrial and shipping group Yildirim considered an investment in German container line Hapag-Lloyd before settling on French competitor CMA CGM as a better choice, the group’s president and chief executive said today.
Yildirim also aborted its own plans to launch a container line once the CMA CGM opportunity arose, says Robert Yuksel Yildirim, who was speaking at an industry event outside of Turkey for the first time.
“Our banks also showed us Hapag-Lloyd first, but we chose CMA because we believe it was a better investment,” Yildirim said at Marine Money Hamburg, drawing a light murmur from the largely German audience.
Yildirim to many appeared to come from nowhere to seal the $500m investment in CMA CGM in January, after a few other investment propositions to the French liner giant failed to result in an agreement.
The Turks get a 20% stake through convertible bonds redeemable in five years. But, as Yildirim made clear in his address, the company did not appear from off the map.
Founded in 1963 in Turkey by Yildirim’s father, the family-owned company has grown into a diversified oufit with holdings in mining, ports, shipowning and a private-equity unit that was responsible for the CMA investment.
“In 2009, we established an opportunity desk,” Yildrim said. “We entered the (financial) crisis with $500m in cash. We are diversified. We mainly use the shipping as a speculative investment, while we make the money on the industrial side.
“People are telling me noone was expecting it (Yildrim’s investment in CMA),” he said. “We took our chance and signed the deal. We saw this as a great opportunity.”
Yildirim liked CMA CGM’s status as the world’s third-largest container line and thought the deal had “high upside potential,” he said.
It saw synergies with its own involvement in the port and container-terminal business. And the deal stands to raise its profile and credibility with international banks.
“If we don’t see any management issue inside the company, we don’t see any risk,” Yildirim said, explaining why it liked the investment when other money sources walked away.
Jacques Saade.
Why did CMA like Yildirim after spurning others? Yildirim says the group’s nimble decision-making ability played a part. Without needing to consult a board or shareholders, he and CEO Jacques Saade can arrive at a decision “in five or 10 minutes,” he said.
CMA also appreciated that, unlike some of the other proposals, Yildirim did not insist on management changes or additions.
“We thought upper management was excellent, we feel they’re doing a fantastic job,” he said. “We got three seats on board. So, so far so good.”
Yildirim actually offered to inject $1bn, he says, but Saade felt the larger amount wasn’t needed. It has provided an additional $250m in standby funds, but doesn’t anticipate it will be used, he adds.
The Turkish company normally expects to take a majority control with private-equity injection, but makes exceptions with certain projects that meet is criteria. The liner deal was one such case.
Yildirim plans to exit the investment within five years, either through a sale to Saade, third parties or an initial public offering.
Yildirim boasts a fleet of eight chemical tankers and six bulkers, with seven newbuildings in the works. It hopes to build the fleet value to $1bn by 2015
By Joe Brady in Hamburg
Published: 12:36 GMT, 24 Feb 11 | updated: 12:53 GMT, 24 Feb 11
