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  • ITVI.USA
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  • OTRI.USA
    6.600
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  • OTVI.USA
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American Shipper

Yildirim increases stake in CMA CGM to 30%

   Yildirim Group plans to acquire an additional 10 percent interest in CMA CGM this year by investing another $250 million in the French container shipping company.
   Yildirim, which is based in Istanbul, purchased a 20 percent interest in CMA CGM in 2010 for $500 million and had an option to acquire an additional 10 percent for $250 million, which Robert Yuksel Yildirim, president of Yildirim Holding Inc., said has been called by CMA CGM.
   He said the investment would be made later this year, noting that CMA CGM is also in talks with a French sovereign investment fund about a possible investment.
   Earlier this year press reports said Le Fonds stratégique d’investissement (FSI), or strategic investment fund, was considering investing about 150 million euro ($188 million) in the company to balance the investment by the Turkish firm.
   Claire Defendini, a spokesman for CMA CGM, said the company had no comment.
   In New York to speak at a ship finance conference sponsored by the magazine Marine Money, Yildirim said the outlook for the container industry for this summer looks strong, and believes shipping companies are making profit in the second quarter.
   While after September “nothing is clear,” he added “I think the third quarter will be good. In reality it is turning into a good year, thanks to Maersk.”
   He explained that when Maersk announced its Daily Maersk service from the Far East last fall it triggered a wave of consolidation in the industry in the Asia-Europe trade lanes through the partnering of Mediterranean Shipping Co. and CMA CGM, the formation of the G6 alliance by the New World and Grand alliances, and the partnering of the CKYH Alliance with Evergreen and UASC.
   “That was what was needed. I hope this consolidation continues for at least another year,” he said. Yildirim said he believes the period 2013-2015 should be “pretty much good years compared to 2011 and 2012—I’m more optimistic.”
   He expects average global container rates will increase 9.8 percent this year, compared to a 16 percent drop last year.  
   Again, he attributed this, in part, to what he views as a change in attitude at Maersk, which he says sets the tone for the industry and has become more focused on increasing profits and not just volumes.
   Yildirim’s Istanbul-based company had revenue of $1 billion and EBITDA of $370 million in 2011. It has diversified interests in mining and metals, fertilizers, port management, shipping, coal and coke trading, private equity and venture capital. While many of its investments are in Turkey and Europe, the company has been expanding in South America, Africa and the Far East.
   “Mainly we make the money in other fields and invest in maritime,” Yildirim said—a comment that got a laugh from the conference audience, which heard two days of gloomy predictions about the outlook for the shipping industry, especially the dry bulk and tanker sectors. He quickly added “I’m hoping one day I will make money.”
   Yildirim said his company had entered the global financial crisis with a war chest of $500 million and used it to invest in shipping. In addition to its investment in CMA CGM, it paid 200 million euro ($251 million) for a half interest in the Malta Freeport and acquired a 75.11 percent interest in Sealease, a Belgian based company that leases small boats, and a technical management company for chemical tankers and bulk ships.
   In addition to its terminal in Malta, Yildirim has terminals in Gebze, southeast of Istanbul, where it’s increasing capacity from 550,000 TEUs to 1.5 million TEUs and in Gemlik on the Sea of Marmara adjacent to its fertilizer plant.
   Yildirim noted CMA CGM had been a customer of his company at its terminals in Turkey, and he knew the company “inside out,” so when talks between the French company, Goldman Sachs and Qatari investors broke down in 2010, he entered into intense negotiations with the management of CMA CGM and reached a handshake deal within a month for his company to invest in the liner.
   As Yildirim Group was not well known in the industry, “everyone thought it was a joke from Jacques Saade (the founder and chairman of CMA CGM). Suddenly I became a popular new kid on the block,” he said. 
   He said when he was asked “Why did you do this? CMA CGM was like a burning, big fire, and I walked in like a fireman to put the fire out, which I did.”
   Some in the industry thought CMA CGM should get out of the business to give the industry balance, he said. “I said I should be a crazy Turkish investor, come into the industry and show how to rescue such a good company, which I believe I did a great job of putting my money and will keep putting my money because I see great potential in this company, good upside.”
   “During this crisis, what we see are economies getting global, but politics getting national,” Yildirim explained. “Every country is trying to protect their flags. CMA CGM is carrying the French flag, so I do not think the French government will let CMA CGM go down, and I do think banks will lose their money in CMA CGM, so I felt comfortable when I chose my investment in CMA CGM.”
   Yildirim said he believes CMA CGM chose his company as an investor because it was “so reasonable, not greedy.” Other companies, he said, wanted more than 30 percent and were trying to control the management of the firm.
   Both his company and CMA CGM are family-owned and can make decisions quickly.
   Yildirim has three seats on the company’s board and “veto right to protect our investment.”
   He also said the company’s involvement in the steel and steel alloy industry is useful to CMA CGM because of the intelligence it can provide to the shipping company is a good leading indicator as to where steel demand and shipping is headed. – Chris Dupin

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