Options
Private equity fund investment in the European ferry industry
Baird, Alfred J.
2009
Abstract
Over recent years Private Equity Funds (PEF’s) have found the European ferry market to represent an
attractive investment opportunity. This paper explains the development and working of PEF’s, reviewing
the pros and cons for this type of investment model. Over the last decade there have been 22 separate
transactions completed by PEF’s involving the acquisition of 11 different ferry companies throughout
Europe. Combined, this amounted to a total investment of €7.7 billion. A series of case studies
undertaken by the author relating to the acquisition of individual ferry operators by PEF’s offers
preliminary understanding of these transactions. The case studies highlight specific characteristics of the
ferry market that private equity investors find attractive. Not least among these characteristics is: barriers
to entry, long established businesses, the essential infrastructure nature of ferry services, steady cash
flows, and high market share. PEF’s appear to regard ferry services as displaying characteristics quite
similar to other essential transport infrastructure investments such as roads and railways. Based on this
analysis, it seems that PEF’s view the ferry market as a relatively safe and attractive investment
opportunity. Sellers, and regulators of ferry markets (perhaps more especially in the case of subsidized or
island ‘lifeline’ services), need to be conscious of the potential opportunities, as well as the possible
disadvantages of PEF investment and ownership. Buyers (i.e. PEF’s) also need to be aware of the risks
involved (e.g. from over-paying, new regulations etc), as well as the rewards.
Series
European Transport / Trasporti Europei
42
Publisher
EUT Edizioni Università di Trieste
Source
Baird, A.J. (2009) “ Private equity fund investment in the European ferry industry”, European Transport \ Trasporti Europei, (42) pp. 47-66
Languages
en
File(s)