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TMCNet:  Fortress takes containers to market in $345m Seacastle IPO

[September 17, 2007]

Fortress takes containers to market in $345m Seacastle IPO

(Lloyds List Via Thomson Dialog NewsEdge) FORTRESS Investment Group has taken the container and chassis assets it has quietly acquired in recent years to market, through the flotation of a newly formed company named Seacastle, which could raise up to $345m.

Pricing of the issue has not yet been announced, nor the shareholding Fortress will retain in Seacastle. The proposed initial public offering is being underwritten by Citi, Bear Stearns, Deutsche Bank and Merrill Lynch.

Seacastle fashions itself as one of the world's biggest lessors of intermodal equipment, comprising chassis, containers and gensets. Major shipping lines, as well as railway and truck companies, lease these assets under long-term arrangements. Seacastle also owns 11 containerships and newbuildings with a total capacity of 50,000 teu, according to a Form S-1 registration statement filed with the US Securities and Exchange Commission (SEC) last week.

Altogether, Seacastle controls assets worth $4bn, which includes 249,000 intermodal chassis and 976,000 teu of dry and reefer containers. Seacastle employs 358 people in 34 offices in nine countries.

Seacastle claims ambitious growth plans. Additional planned investments in intermodal assets would mirror the 11.3% and 10% growth in global container trades expected this year and in 2008, the SEC filing states.

'The current intermodal market includes over 1m chassis, 24m teu of containers and over 4,000 containerships. We estimate the global intermodal equipment fleet has an aggregate value of over $250bn and approximately 40%-50% of these assets are leased,' the document said.

The document details how Fortress built up the assets that were reversed into Seacastle. Since 2006 Fortress has purchased some $1.3bn in intermodal assets, including $550m in boxes, $550m in boxships and $225m in chassis. Seacastle is built upon the acquisitions of Carlisle Leasing in February last year, followed by the takeover of Interpool earlier this year.

The acquisition of the reputed and historic Interpool, based in Princeton, New Jersey, trumped a management buyout offer that was on the table at the time, which went to underscore Fortress' dedication to building the business up.

Seacastle's plans, detailed in the SECfiling, include a declaration that the company would consider heavy further investments in containerships.

Seacastle's current fleet comprises six containerships of 5,000 teu each and one of 2,500 teu. The company has four newbuildings of 4,400 teu each under construction at Daewoo Shipbuilding & Marine, with scheduled deliveries in 2010.

All ships except one newbuilding are under long-term charter, which is Seacastle's preferred model of doing business.

A crack 'acquisitions team' in Singapore would help Seacastle identify future containership acquisitions, the company has revealed. While not professing partiality to one particular ship design or type, Seacastle plans to add containerships to its asset portfolio to minimise exposure to one particular segment of the containership sector.

'Furthermore, we maintain a long-term investment approach rather than a short-term trading approach,' the S-1 filing promises.

Fortress, a hedge and buyout fund manager founded in 1998 which itself went public earlier this year, is known in Wall Street circles as the prototype of a big hedge fund that keeps getting bigger, thwarting opportunities for smaller rivals.

As of June 30 this year, Fortress had $43.3bn in assets under management. Private equity funds made up $23.4bn of the total.

Copyright 2007 Informa Maritime Trade and Transport , Source: The Financial Times Limited

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