Greek shipping magnates navigate choppy waters

The flamboyant tycoons who run Greece’s shipping industry are feeling troubled. Not only is finance for new vessels increasingly tricky to come by, but the private banks they used previously are struggling to achieve respectable returns on their investments. What’s more, the transition of family assets to a business school educated, tech savvy next generation, often lacking in maritime experience, is also causing sleepless nights for the old-timers.

Shipping remains crucial to the Greek economy. John Platsidakis, chairman of industry body Intercargo and managing director of Anangel Maritime Services, the dry bulk arm of the leading Angelicoussis Shipping Group, calculates the 4,000-strong national fleet (others put the number closer to 5,000) provides employment for more than 250,000 workers.

“We create wealth for the public by employing people and paying them, without getting financial benefits from the state,” he says, highlighting donations made by shipping families to build schools and hospitals. He gestures to his neighbouring building, the Onassis Cardiac Surgery Center, a legacy of a foundation set up by legendary shipping magnate Aristotle Onassis in memory of his son, Alexander.

Yet business has been rocky in the wake of the financial crisis, not least due to difficulties accessing funding from domestic or international banks. Fewer and fewer are prepared to provide ship mortgages, leaving the families to turn to private equity funds and Chinese leasing companies, now numbering 8,800, according to Cruise Chi, executive manager of Bocomm Shipping Leasing (Europe), affiliated to China’s Bank of Communications.

Yet despite the best efforts of private equity houses to adapt property- and aviation-funding models to shipping, many of Greece’s 1,000 ship-owning families are in danger of overextending themselves, believes Basil Karatzas, chief executive of Karatzas Marine Advisors, a shipping finance consultancy. “Everyone has ordered too many vessels and flooded the market with ships; they have overestimated the recovery story.”

Bankers also recall problematic experiences with Greek shipping tycoons, reluctant to follow financial advice or pass holdings onto the next generation. “These are the tightest, most controlling patriarchs you will find anywhere,” says one Greek banker with 30 years’ experience. “They will do everything they can to hold onto and control their assets.”

Trust your gut

Mingling with ship owners during a lunch break at the recent Shipping Finance 2018 summit, held in the Greek capital’s Athenaeum InterContinental Hotel, Emmanuel Vordonis laments the new generation’s obsession with data analysis.

Younger family members rely on “consultants, dashboards and [key performance indicators]” rather than instinct and appreciation of “rough seas and saltwater”, says Mr Vordonis, former chairman of Thenamaris Ship Management, owned by the Martinos dynasty, which controls 135 ships. He has since decided to divert his energies to real estate investment and restoring luxury properties.

This gut feeling extends into family investment portfolios, adds George Tsavliris, principal of the Tsavliris Salvage Group, and their reliance on advice from private bankers is also diminishing.

Like other shipping entrepreneurs, his father emigrated to Greece from the then Ottoman empire, buying rusty vessels from the US Navy in 1945, before building up trade in Cuba and Latin America.

Mr Tsavliris regularly invested what he jokingly describes as “petty cash” with Swiss private banks, including UBS and Credit Suisse, for returns of up to 7 per cent.

“They wanted deposits, they couldn’t care two hoots about our business, they were just chasing cash,” he recalls, adding that the Swiss giants remain buoyant in this sector. Clients claim most banks have failed to create a persuasive offer in shipping. Only the likes of Credit Suisse and German player Berenberg, they say, have managed to arrive at a successful formula, by integrating private banking and shipping finance to build a persuasive offer to shipping families.

Like many others, Mr Tsavliris has lost substantial sums after following private bankers’ recommendations and now prefers to trust his instincts. “Based on their track record, most banks, when they give you highly sophisticated advice, it comes to nothing,” he says.

The solution for many families has been to look internally, beefing up their own financial expertise, rather than relying on external consultants or wealth managers, says Matthew Fleming, a partner at Stonehage Fleming, a multi-family office based in London.

“They work with a number of different banks, but using them more as execution platforms, rather than investment managers,” he says.

Yet despite these financial concerns and challenges dealing with both banks and government institutions, Greece’s beleaguered politicians are relying on shipping interests to help bail the country out of its prolonged crisis.

From his office window, Panagiotis Kouroumplis of the ruling Syriza party can hear the horns of car ferries and cargo ships sailing from the port of Piraeus – a daily reminder of the country’s vibrant nautical heritage.

A shipping revival would contribute a “very large extent to the rebuilding of the Greek economy”, believes the minister of Maritime Affairs and Insular Policy, who remembers how the country’s annual $14bn income from shipping nearly halved after a debt crisis ripped apart the country’s finances in late 2009.

But that number has begun to rise, nudging $9bn by the end of 2017. And the minister is set to meet with the country’s leading shipping tycoons to remind them of financial responsibilities to their homeland.

Mr Kouroumplis, left blind as a boy by an exploding German grenade left over from the second world war, will ask the shipping families to pledge funds alongside Cosco, China’s state-owned shipping company, which has promised to invest more than €500m to modernise port terminals and logistics facilities. Vessel owners will be asked to bankroll a new financial and maritime hub, offering insurance, banking services and nautical education.

"My conviction,” says the minister, “is that within five years, Greece will have evolved along a dynamic course of growth, which will be envied by many in Europe."