A private equity shipping fund, named the First Maritime Fund, has been launched by Prudent Asset Management. The fund, incorporated in the Cayman Islands, will invest in the small- to medium-size sector of the dry bulk shipping market. The expected launch size is around $150 million, the asset manager said in a statement.

The fund focuses on the acquisition and operation of small- to medium-sized vessels to ensure versatility for cargo transported and accessibility of harbours. Danad Shipping Compnay will be the exclusive ship manager for the fund's vessels.

The shipping market - the fortunes of which often closely correlate with the strength of global trade - has seen a number of investment ventures in recent years. For example, last year, it was reported JP Morgan Asset Management was investing in the distressed shipping market, hoping to exploit the sharp reduction in prices for this sector when an eventual recovery occured. There are also hedge funds that trade in shipping-linked derivatives, plus investment banks such as Goldman Sachs, Merrill Lynch, Deutsche Bank and Morgan Stanley. 

Prudent Asset Management is run by Achillefs-Sotirios Vardakis, Nikolaos Kouros and Konstantinos Choupas. Vardakis established Danad in 1980, the firm said in its statement.

The First Maritime Fund promises high-growth potential through tax-efficiency and transparent management procedures.

The fund targets a medium risk profile.

A minimum dividend of 60 per cent of realised net revenue profit from the operation of the vessels, will be distributed annually. The fund is incorporated with limited liability in the Cayman Islands as a closed-ended investment company and the expected launch size is in the region of $150 million.

"The fund's launch has been timed to ensure the best possible entry point into the market to maximise return on investment,” said Kourous, director of Prudent Asset Management.

“It launches at a time of promising opportunity for investment in the shipping market as the charter market returns to health since the global economic slowdown, when both charter earnings and asset values were significantly depressed."

The fund offers innovative strategies for large investors, giving them the option to assume full ownership of one or more vessels, managed by the ship manager, enabling them to leverage the company's experience and reduce their costs. They will benefit from specific vessels operating returns directly, and have full control over their own exit strategy through the sale of those assets.

Carne Global Financial Services, an international advisor to the fund management industry, advised by Prudent on establishing the optimal structure for the fund.