Institutional Private Equity and ShippingHansa Forum

November 19, 2015

Kevin M. KennedyManaging DirectorMC-Seamax Management Ltd.

• MC-Seamax Management Ltd. was founded in 2012• Joint venture between Seamax Partners and a major multinational corporation• Alternative asset manager focused on the maritime sector• Staffed by seasoned industry professionals• Independent• Offices in Stamford, US, and Leer, Germany

• Currently managing the MC Seamax Shipping Opportunities Fund focused on investments in containerships• Equity commitments from North American, Asian and European institutional

investors• Focused on projects with predictable medium-long term cash flow• Current fleet of seven post-panamaxes on multi-year charters to major liners• Conservative capital structure to address industry cyclicality• Appetite for additional acquisitions

MC-Seamax Group

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• Focus on direct investments in companies or tangible assets rather than publicly-traded securities

• Higher return expectations: IRRs of 15+% vs. ~9% for public equities

• Active investment management with fund managers bringing operational, financial and strategic expertise to improve valuations during hold periods

• Dominated by funds established in the US but there are numerous managers based in Europe and Asia

Institutional Private Equity Fund Overview

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• Public and private pension funds, sovereign wealth funds, financial institutions, endowments and high net worth individuals are major investors in PE funds• Investments in sector have grown as investors allocate more capital to

“alternative investments”• Many pension funds underfunded in US and Europe• Investors struggle to achieve targeted returns in low interest rate

environment

• Funds typically structured with finite lives (5-10 years) so exit strategy is critical• Private to public “arbitrage” makes IPO a favored strategy• PE managers also consider mergers, private sales or asset sales as viable exits

Institutional Private Equity Fund Overview (Continued)

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• Bain & Company estimates $499 billion in new commitments raised by 1001 funds in 2014

• According to Pensions & Investments Online, top ten PE managers had over $900 billion in assets under management at the end of 2014 having raised $227 billion over past five years

Institutional Private Equity Fund Overview (Continued)

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ManagerAUM ($B)

Apollo 149.5Blackstone

146.0

Carlyle 123.8KKR 98.6Ares 75.2Oaktree 70.4Fortress 67.5Bain 65.0TPG 62.0Ardian 45.0

Source: Pensions & Investments Online

• Early deals • General Maritime teamed with Oaktree, Wexford and others in late 1990’s

to acquire crude tankers. IPO in June 2001• Horizon Lines (Carlyle, Castle Harland), Eagle Bulk (Kelso) and Quintana

(Robertson) were prominent PE deals that led to IPOs in mid-00’s

• 2008 market correction led to massive increase in PE interest in shipping• “Distressed” investing is seen as a way to achieve outsized returns• Opportunities to invest directly in vessels or distressed debt• Specialized distress firms have restructuring expertise• Top fund managers such as Apollo, Oaktree, KKR, Carlyle, Wilbur Ross and

Riverstone have made significant investments in sector• Funds generally formed JVs with established industry insiders or “hired”

management teams• MC-Seamax one of few firms able to invest directly in assets

Private Equity in Shipping

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• US SEC-registered funds with > $2B in AUM manage $1.9 trillion in total assets (excluding real estate, securitized asset, VC and liquidity funds)• Survey implies ~$25B invested in “Water Transportation” at YE 2014• Probably understates actual investment as non-registered and smaller funds excluded

How much has been invested?

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Gross Assets (Percent of Total)

Source: SEC Private Funds Statistics Fourth Calendar Quarter 2014

Type 2013Q4 2014Q4Oil & Gas Extraction 7.8 7.5Electric Power Generation, Transmission & Distribution 3.8 3.7Software Publishers 2.8 3.7Pipeline Transportation 2.4 2.5Telecommunications Data Processing Services 2.6 2.4Data Processing, Hosting, & Related Services 2.8 2.2Other Information Services 2.0 2.0Other Financial Investment Activities 1.9 1.7Support Activities for Mining 1.3 1.5Electronic Shopping & Mail-Order Houses 0.8 1.4Limited-Service Eating Places 1.0 1.4Water Transportation 1.1 1.3Pharmaceutical & Medicine Mfg 1.0 1.3Medical Equipment & Supplies Mfg 1.1 1.2Activities Related to Credit Intermediation 1.2 1.2Management, Scientific, & Technical Consulting Services

1.0 1.2

Commercial Banking 1.8 1.1Educational Services 1.1 1.0Special Food Services 1.3 1.0

• Ships are perceived as interesting assets• PE firms have substantial capital to deploy and industry has substantial

requirements while traditional sources are strained• Lenders dealing with massive problem loan portfolios are seeking

liquidity and struggling to make new loans• Traditional shipowners and German private equity market hurt by

falling charter rates• Paradigm shift as industry moved into Eco Ships• Vessels are fairly liquid assets which should improve ability to time exits• Volatility must be carefully managed but it creates potential for significant

returns for well-timed investments• Potential for attractive annual yields as well as interesting total returns• Low correlation to other investment classes helps with portfolio

diversification• Industry became fashionable (even sophisticated investors are influenced by

herd mentality)

Why Shipping?

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• Potential for attractive yields backed by TCs with reliable counterparties• Seacastle (Fortress) and Nautilus (GE Capital and others) done mid-’00s to

capitalize on private public valuation differential but missed market• Post-2008 a large number of firms made investments

• Severe market disruption in panamax and sub-panamax sectors• Apollo, KKR, Oaktree, Kelso, Carlyle, York and others formed ventures with

industry partners to take advantage of low newbuilding and 2nd-hand prices• A number of funds acquired distressed debt from lenders

• As many of these investments have been on the books for several years, managers are considering exits • Costamare MLP (York) and Poseidon (Kelso) filed for IPOs in 2014-15 that

have yet to close• A number of newbuilding resales and secondhand sales seem to have been

affected by PE investors

Activity in Container Sector

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• New investment activity has significantly slowed as depressed conditions continue• Many investors looking for exits but only tanker sector has shown signs of recovery

• Ardmore (Greenbrier): IPO in 2013; Greenbrier just sold 50% of remaining stake• General Maritime (Oaktree and others): Merger/IPO in June 2015• Principal (Apollo): Filed for IPO in 2014, private sale in October 2015• Ridgebury (Riverstone): Private sale process underway• Several other tanker investors rumored to be in market

Current situation

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Source: Clarksons

2008

-May

2008

-Oct

2009

-Mar

2009

-Aug

2010

-Jan

2010

-Jun

2010

-Nov

2011

-Apr

2011

-Sep

2012

-Feb

2012

-Jul

2012

-Dec

2013

-May

2013

-Oct

2014

-Mar

2014

-Aug

2015

-Jan

2015

-Jun

010,00020,00030,00040,00050,00060,00070,00080,00090,000

110,000 dwt Tanker 75,000 dwt Bulkcarrier

4400 teu Containership

One Year TC Rates ($/day)

Substantial PE (~$25 billion) has been invested in sector

New PE investments in sector have waned in recent years over concerns regarding vessel oversupply and lower than expected growth in demand

Outside of a few tanker deals, pace of exits has likely not satisfied demand

Weakness in bulker, container and offshore sectors has caused reduced valuations and irritated investment managers

Investor interest will likely return if asset values continue to decline and more distressed loans are offered on secondary markets

PE will be investing in shipping as long as promise of outsize returns exist

• Public markets should take over as industry recovers and company valuations improve to premiums over NAV

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Summary

Disclaimer

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This document is prepared solely for use at the Hansa Forum. The information contained herein is provided for informational and discussion purposes only and is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in MC Seamax Shipping Opportunities Fund LP (together with any parallel feeder funds, the "Fund"), managed by MC-Seamax Management Limited (the “Investment Manager”). A private offering of interests in the Fund will only be made pursuant to a confidential private placement memorandum (the “Offering Memorandum”) and the Fund’s subscription and constitutional documents, which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. The information contained herein is qualified in its entirety by reference to the Offering Memorandum, which will contain additional information about the investment objective, terms and conditions of an investment in the Fund and will also contain tax information and risk disclosures that are important to any investment decision regarding the Fund. In considering any performance data contained herein, you should bear in mind that past performance is not indicative of future results, and there can be no assurance that the Fund will achieve comparable results. Nothing contained herein should be deemed to be a prediction or projection of future performance of the Fund.

All investments contain risk and may lose value. There is no guarantee that these investment strategies will work under all market conditions and each investor should evaluate their ability to invest over the long-term. No representation is being made that any product or strategy will or is likely to achieve profits, losses, or results similar to those shown.

Each investor should consult its own attorney, business adviser, and tax adviser as to legal, business, tax, and related matters concerning the information contained herein and such offering. Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date hereof and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. Nothing contained herein is, or should be relied upon as, a promise or representation as to the external conditions or circumstances under which the Fund or any other person or entity will operate (including, without limitation, overall market conditions, technology developments, regulatory developments, strategic alliances, and other matters outside the control of such parties). Overall, investors must not rely upon any matters described in this document. This document does not subject the Fund or the Investment Manager to binding obligations. Only those obligations expressly set forth in a definitive agreement executed by Fund shall be binding upon the Investment Manager or the Fund.

Certain of the factual statements made in this document are based upon information from various sources believed by the Investment Manager to be reliable. The Investment Manager and the Fund have not independently verified any of such information and shall have no liability associated with the inaccuracy or inadequacy thereof.

Certain transactions give rise to substantial risk and are not suitable for all investors. This material is intended for institutional or qualified customers only and furnished for informational purposes..