HONG KONG Carlyle Group CYL.UL has formed a joint venture with maritime investment firm Tiger Group to buy more than $5 billion worth of vessels with a group of other investors to tap growing shipping demand in the region.
The joint venture will commence operations immediately and has committed to invest equity capital of $900 million in the next five years, Carlyle said in a statement on Monday.
Private equity firm Carlyle said the venture would buy container, dry bulk, tanker vessels and other shipping assets. Their partner Seaspan Corp (SSW.N) and the Washington Family, would invest solely in container vessels purchased by the newly-formed firm, it said.
"We believe there is a compelling opportunity to serve Asia's continuing growth in demand for shipping capacity," Yi Luo, managing director of Carlyle's Asia buyout group said in the statement.
The joint venture is looking for opportunities to buy ships when the market is in a downturn.
It will be led by Seaspan's CEO Gerry Wang and director Graham Porter. It will 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 statement said.
In Asia, private equity funds are sitting on estimated $73 billion in undeployed cash and have been chasing investment opportunities.
"There is a lot of funding in the market and private equity firms are looking for investment opportunities," said Geoffrey Cheng, an analyst at MF Global.
Carlyle's equity contribution will come from Carlyle Partners V and Carlyle Asia Partners III, which it did not disclose.