Navios Maritime Partners has amassed the firepower to add between six and 11 bulkers following a $100m fundraiser, JP Morgan says.
New York-listed Navios Partners became the latest bulker owner to seek growth capital in a rising market in a follow-on offering lead by Fearnley Securities.
While detailed use of proceeds have not been laid out, sources explain that the cash is for expansion at a company that does not have any debt amortization until 2020.
Noah Parquette of JP Morgan estimates that the owner will have a cash balance of $125m at the end of the first quarter.
The analyst believes $100m of that will be set aside for purchases, which when combined with debt financing hikes Navios Partners' firepower to $200m.
"So the company could conceivably buy 10 or 11 panamaxes or six to seven capesizes, depending on age," Parquette concluded.
Its move comes at a hectic time in the dry cargo sale and purchase market which has seen asset prices climb by15% in the past week, according to Frode Morkedal of Clarksons Platou Securities.
He notes that Clarksons now prices a five-year-old cape at $30m, up from $26m previously. At the same time, a five-year-old panamax has climbed by 10%.
However, five-year-old vessels would need to rise by a further 16% before reaching parity with the cost of newbuildings, Morkedal explains.
Disclosure: I am/we are long NMM.