Seaspan and Carlyle Group in $5 billion ship acquisition joint venture

Seaspan Corporation, the Washington family, Gerry Wang and Graham Porter are partnering with the Carlyle Group and Tiger Group Investments to acquire more than $5 billion of ships.

The joint venture – which according to a 6K filed by Seaspan is called Greater China Intermodal Investments LLC – will primarily focus on bringing together Chinese shipbuilders, lenders and state-owned companies to support China’s desire to increase the amount of cargo it controls. The company will be led by Gerry Wang and Graham Porter, who together have more than 50 years experience in the shipping industry and finance, primarily in Asia.

Gerry Wang is Seaspan’s CEO  and according to Seaspan will remain in that role through Jan. 1, 2013, after which he will remain with the company as co-chairman. Graham Porter is  a director of Seaspan and has served as managing director, deputy chairman and director of Seaspan Management Services since August 2005. Mr. Porter is chairman of Tiger Group, an investment firm based in Hong Kong which, through its affiliated companies, holds shares in Seaspan and in other shipping ventures.

According to the 6K, Seaspan has signed a letter of intent to purchase a significant number of newbuilding containerships to be constructed by a leading Chinese shipyard – its first newbuilding order since 2007. The New Panamax 10,000 TEU vessels will be constructed using a lightweight and fuel efficient design. Seaspan expects that any order resulting from this letter of intent will be made available to Greater China Intermodal Investments LLC, though Seaspan has a right of first refusal.

Mr. Wang said, “There is increasing desire among Chinese state-owned entities to control the ships that transport their goods around the world. We are confident that our long-standing relationships amongst the world’s shipbuilders, charterers and financiers, particularly in the PRC, will allow us to continue to successfully execute our growth model. We are excited to partner with The Carlyle Group, whose remarkable global platform and relationship network adds an important means of value creation as we source and execute transactions.”

Greg Ledford, Managing Director and head of Carlyle’s Industrial and Transportation team, said, “This is a creative solution that combines Carlyle’s extensive transportation experience and established Asia business with the shipping expertise and leadership of Gerry and Graham.”

Yi Luo, Managing Director of Carlyle’s Asia Buyout group, said, “We believe there is a compelling opportunity to serve Asia’s continuing growth in demand for shipping capacity and are pleased to partner with Gerry and Graham, who have a track record of success in the region.”

Carlyle’s equity contribution will come from Carlyle Partners V and Carlyle Asia Partners III.

Deutsche Bank served as exclusive financial advisor to Carlyle and Tiger in establishing the joint venture. Latham & Watkins LLP served as counsel to Carlyle, and Shearman & Sterling LLP served as counsel to Tiger, in connection with the transaction.

March 14, 2011