Ship funds
A ship fund is a closed-end fund that invests the collected capital in the construction and / or acquisition of ocean-going ships .
How can generally in closed-end fund investors / investors to the fund only during the placement period to join. After the necessary equity has been raised, the fund is closed.
Features of a ship fund
- The investor participates as a limited partner in a limited partnership
- It is a long-term investment, usually with a term of 10 to 25 years
- The investment object is fixed
- Entrepreneurial investment with opportunities and risks ( co-entrepreneur )
- No entitlement to a fixed interest rate or a fixed repayment date
- Total loss of participation possible
- There is a pre-formulated contract, at least one partnership and trust agreement over which the individual investor has no influence
- There is a sales prospectus in which the essential information on the investment and the legal and tax framework are described
- Any sale of the participation not secured
Legal basis
Ship funds are usually set up in the legal form of a GmbH & Co. KG . The initiator offers to participate in the limited partnership capital of the company through banks or independent brokers. Management is the responsibility of the general partner, usually a GmbH. The limited partners have basically no influence on the management. Participation and control rights as well as profit sharing and share of the dispute credit are regulated in the articles of association. Investors usually have the choice of either being registered as direct limited partners in the commercial register or of participating indirectly in the company through a trustee . The trustee manages the limited partner's share in his own name for the account of the trustor. The name of the investor does not appear in the commercial register for a fiduciary participation.
The basis of the participation is a set of agreements (in particular company and trust agreement) as well as the issue prospectus, which has been subject to approval by the Federal Financial Supervisory Authority (BaFin) before the start of sales since July 1, 2005 (the basis is the asset sales prospectus regulation). BaFin does not check whether the information in the prospectus is correct or whether the investment makes economic sense. The information in the prospectus subject to prospectus liability . According to § 8g VerkProsG , the prospectus must contain all factual and legal information that is necessary to enable the public to make an accurate assessment of the issuer and the investments. An auditor commissioned by the provider checks the legal and economic information in the prospectus on the basis of the IdW S4 standard. The result of this examination is a written prospectus examination report.
The provider has freedom of design when drawing up the contracts (company and trust agreement). The spectrum ranges from balanced contracts with fair consideration of investor interests to contracts that exclude the investor's control, intervention, information and co-determination rights, insofar as this is legally required.
Liability of the investor / subscriber:
a) Statutory liability from Section 172 (4) HGB
Payouts consist of profits and / or repayments of the company's capital. To the extent that the subscribed mandatory contribution falls below the liability amount entered in the commercial register due to repayments, the investor is directly liable to third parties in accordance with Section 172 (4) of the German Commercial Code. This occurs regularly with ship funds in the first few years and during liquidity bottlenecks. In the event of insolvency, creditors can then be asked to repay dividends until the liability amount is reached again. Details can be found in the investor's capital account, in which deposits and withdrawals as well as the profits and losses attributable to him are recorded. If the balance of the capital account is less than the entered liability amount, liability is revived in the amount of the difference, but at most in the amount of the payments received. The registered amount of liability can be lower than the mandatory contribution (subscription amount). In terms of liability, it is advantageous if only a small part of the mandatory contribution is entered as the liability amount. The possible external liability can endanger the other assets of the investor. An indirect / fiduciary participation does not change this liability risk economically, as it is regularly agreed in the trust agreement that the trustor (investor) releases the trustee from liability risks associated with the participation.
b) if the participation is sold
The seller is liable to third parties for liabilities justified upon departure for a period of 5 years after his departure in accordance with Section 160 (1) HGB in the amount of the liability amount. Agreements on this can be made with the buyer; However, these agreements only work between the contracting parties and change liability in external relationships, e.g. B. Society's creditors, no.
c) from company law provisions
The articles of association can design the internal relationship largely freely (optional, Section 161 (2), Section 109 HGB). Articles of association can therefore establish additional liability regulations for the partner. It can be agreed that payments that are not matched by commercial law profits are to be assessed as loans to the shareholder and that these can be reclaimed by the company if necessary. The claim for repayment is subject to a 3-month notice period in accordance with Section 488 (3) BGB . The same economic obligation applies to indirect / fiduciary holdings via the trust agreement.
Tax bases
The profit is determined by the company and arithmetically distributed among the investors; the profit share is independent of the amount distributed. For each limited partner, the profit share is part of the income from commercial operations .
A ship fund company generates income from commercial operations. The Company can provide tax profit inclusive based on the net tonnage of the ship determined (lump-sum profit calculation in accordance with § 5a EStG , so-called tonnage tax ), provided that it so requests, the ship operated in international traffic, ship management is carried out of the ship domestically, the management of the fund company is domiciled in Germany and the ship is entered in a German register. The company is bound by this application for 10 years. The application of the tonnage tax leads to low, flat-rate profits for the company regardless of the real profit or loss situation. For the limited partners, the tonnage tax leads to a low taxable profit from the participation of around 0.1% to 0.4% per year based on the subscribed limited partnership capital. The individual tax rate is then payable on this profit. It should be noted that the tonnage tax may already be used to settle any subsequent profits from the sale of the ship.
If the investor has been entered in the commercial register (direct participation), he will benefit from the current legal situation
- the low inheritance tax and gift tax values: the tax base is the proportionate tax balance sheet value ; Often the values are negative due to the degressive depreciation and the repayments of parts of the deposit that have already been made with the payments (no negative values can be transferred in the case of gifts)
- the exemption of € 225,000, which can only be used once every 10 years
- the valuation discount of 35% according to § 13a ErbStG
- the tariff limit according to § 19a ErbStG
However, the tax benefits do not apply retrospectively if the participation is sold within five years, the company is given up or the withdrawals made by the heir / donee within 5 years exceed the sum of his contributions and the attributable profit shares by more than € 52,000. The aforementioned tax advantages do not apply to an indirect / fiduciary participation !
Fund concepts / fund invoices
After the introduction of § 15b EStG in December 2005, the new conception of ship funds with initial losses of over 10% of the limited partnership capital ( tax deferral models ) was stopped. The so-called combination models (initial tax losses in the first few years with a subsequent switch to tonnage taxation ), which have been popular in the industry for many years, are a thing of the past. This affects all ship funds for which external sales began after November 10, 2005 or for which the investor joined after November 10, 2005 (retroactive effect of the law).
As a result of this legal change, the providers are currently bringing yield-oriented fund products onto the market that benefit from the tonnage tax. The providers' forecast returns have declined in recent years. While in 2002 an average of around 9.5% after-tax return was forecast, the after-tax return fell continuously in the years 2002 to 2006. In 2006 the average expected after-tax return was around 6.8%. Soft costs (mainly sales costs and provider fees) fell from 27.6% of equity including premium in 2003 to 23.3% in 2007. The average fund volume of a ship fund in 2007 was around € 53.5 million.
An analysis by the company TKL Fonds on the distribution and repayment behavior of 1,040 current ship funds from all major issuing houses as of December 31, 2005 has produced the following results (values rounded to full percentages):
| Repayments | Distributions | |
|---|---|---|
| over plan | 61% | 26% |
| in plan | 18% | 28% |
| under plan | 21% | 46% |
Special repayments are part of the normal practice of issuing houses. Almost half of all ship funds did not meet the distribution forecasts.
Ship funds are almost exclusively launched as euro or US dollar funds. Common fund concepts are:
- Single ship with a medium or long-term charter contract
- Single ship, which is employed on a travel basis ( tramp shipping / pool)
- Fleet of the same ships
- Fleet of various ships
- Fund of funds
The investment object can be a used ship or a new build. The common types of ship are container ships , tankers and bulk carriers ( bulk carriers ) of all sizes. But special ships are also offered on the market. The fund company leaves the manned and operational ship to a company and receives the agreed charter income (usually in US dollars). The payments for the limited partners are made from this income after deduction of the ship operating and management costs, interest and repayments for loans taken out and the administrative costs. Excess or shortfalls from this change the existing liquidity reserves. The long-term forecast calculation in the prospectus shows the calculated income and expenses as well as the planned payments to the limited partners. How much the ship cost and what costs are incurred for brokering the equity and the provider's fees can be found in the budget for the use of funds. The source of funds table provides information on the financing of the total costs and the ratio of equity to debt. The return flow statement shows the payouts forecast by the provider, the tax burden and the net returns to the investors. It should be noted that the payments to the limited partners represent excess liquidity of the company.
As part of the long-term forecast calculations, the providers make assumptions about various factors of the forecast calculation (exchange rates, interest rates, ship operating costs, connection charter rates, off-hire days, sales proceeds of the ship, etc.). Depending on the conservative or progressive choice of the various parameters, any distributions and returns can be displayed. In the case of the forecast distributions and returns, the assumptions of the fund calculation must always be questioned as to whether they can be achieved in the long term!
If you want to assess whether a ship investment is on a solid basis, the following points are decisive:
- a good cost price for the ship,
- a market-driven, qualitatively decent ship,
- a first charter with a resilient charterer that is in good proportion to the purchase price,
- a calculated follow-up charter rate that appears sustainable,
- realistic ship operating costs and off-hire times,
- non-excessive soft costs or profit sharing by the provider.
The future returns of the investor from the ship fund then depend primarily on future developments in the charter market , operating costs, interest rates and exchange rates. The operating costs are largely determined by the price of heavy fuel oil ; Ships can save fuel by deliberately slowing down (" slow steaming ").
Collapse in charter rates
In the main shipping markets ( container shipping , bulk carriers and tankers), the market situation deteriorated significantly in the wake of the global recession of 2008-2013. The achievable charter income has decreased and has slumped massively in many areas.
In addition, parts of the global fleet were underutilized and anchored without employment. Laying ships still cause costs ( fixed costs ), but have no income; existing liquidity reserves are used up.
After the collapse of Lehman Brothers, the financing markets were in some cases very uncertain; Formerly leading ship financiers either massively reduced their new business or stopped it entirely. The number of sales transactions collapsed (also because solvent prospective buyers did not receive loans or only received loans at abnormal financing conditions). Ship prices reacted to these developments.
Declining charter income and falling ship values can lead to the conditions and assurances contained in many financing agreements being violated and current loans to be called in by the banks or significantly higher borrowing costs being charged to the funds, which further burden the weak earnings situation. Particularly in the case of funds that have high levels of debt capital, it must be expected that the sharply declining income will not be sufficient to generate interest and repayments and that the funds may become distressed.
In the course of the good market situation and the high income expectations from 2005 to 2008, a large number of newbuildings were ordered in all ship segments. The consequence of this flood of orders was an increase in ship capacity of up to 15% per year from 2009 to 2012. These ships put further pressure on freight rates.
A ' National Maritime Conference ' has been held regularly since 2000. The Association of German Shipowners is monitoring the market situation. A shipping crisis has been reported again since mid-2008 .
Andreas Dombret , member of the board of directors of the Bundesbank, said in March 2013 that the shipping crisis posed a “considerable” risk in the banking sector. Banks had provided more than 100 billion euros in loans for ship purchases. The banking supervisory authority has therefore been analyzing the institutions concerned "for some time with particular attention."
The market for ship funds
In the mid-1990s, an average of around € 1.5 billion in equity was placed annually (= collected and invested by investors). In the following years the equity placed fell to € 1.04 billion in 1999 (see Asian crisis ); by 2002 it again reached a level of € 1.3 billion per year. Depending on the source, different figures are published on the overall market for ship funds (e.g. with or without consideration of private placements or with and without a front-end load ).
| year | Equity according to FTD | Equity according to scope |
|---|---|---|
| 2004 | € 2.91 billion | € 2.48 billion |
| 2005 | € 2.96 billion | € 2.76 billion |
| 2006 | € 2.55 billion | € 2.31 billion |
| 2007 | € 3.58 billion | € 3.00 billion |
According to VGF Association of Closed Funds:
| year | Equity according to VGF |
|---|---|
| 2008 | € 2.48 billion |
The respective fund volumes changed in line with the equity volumes. While in the mid-1990s an average fund volume of around € 3.5 billion was realized annually, the values fell to just € 2.34 billion by 1999, only to increase sharply in the following years:
| year | Fund volume according to scope |
|---|---|
| 2000 | € 3.11 billion |
| 2001 | € 3.37 billion |
| 2002 | € 3.81 billion |
| 2003 | € 5.83 billion |
| 2004 | € 5.98 billion |
| 2005 | € 6.75 billion |
| 2006 | € 5.60 billion |
| 2007 | € 7.05 billion |
Source VGF Association of Closed Funds:
| year | Fund volume according to VGF |
|---|---|
| 2008 | € 5.7 billion |
In 2008, ship funds were the second largest segment in the closed-end fund segment after real estate funds, with around 30% of the equity capital placed. In 2006 a total of 672 sales prospectuses were submitted to the Federal Financial Supervisory Authority (BaFin) for approval. With 192 sales prospectuses submitted, ship funds were by far the strongest segment. Container ship funds traditionally represent the strongest segment, followed by tanker funds (roughly half each of crude oil tankers and product and chemical tankers ). In the past, bulk carriers only had a smaller market share, but were increasingly offered in 2008 due to the boom in this segment. According to information from the VGF Association of Closed Funds, around 38% of the equity volume was sold through banks in 2008, 43% by independent investment advisors and broker pools, 5% through direct sales by providers and 15% through other channels. The turnover on the secondary market for ship investments in 2008 was € 169 million.
More than 180 fund ships, which were financed with over 3.9 billion euros from investor money and bank loans, have gone bankrupt since 2008. By autumn 2014, 450 closed ship funds with a total loss of up to 10 billion euros over the past few years were reported to have gone bankrupt.
The providers
The five largest issuing houses in the ship fund sector in 2006 ( MPC Capital , HCI Capital , Dr. Peters , Lloyd Fonds , König & Cie.) Had a market share of around 56% of the total placed equity of € 2.3 billion. The top 20 providers have a market share of around 91%. In 2006 a total of 53 providers were active, 15 of them newcomers. The provider structure is characterized by medium-sized companies. While smaller issuing houses often only consist of up to 10 people, leading providers in the shipping sector have a total workforce of 100 to around 300 employees.
The ten largest providers of closed-end ship funds in Germany in terms of equity placed in 2011 were Nordcapital , Conti Reederei , MCE, HCI Capital, MPC Capital, Oltmann Gruppe, GEBAB, Vega Reederei, Hanse Capital and Lloyd Fonds.
Investor protection
On May 16, 2013, the German Federal Parliament passed the Capital Investment Code. It came into force on July 22, 2013. With it, the Directive 2011/61 / EU on the managers of alternative investment funds (AIF) was implemented. These funds include open-ended real estate funds, hedge funds and closed-end funds.
Anyone wishing to launch such a fund on the market needs approval from BaFin (provided that they manage more than 100 million euros; funds that manage less only need registration). In order to get such approval, fund providers have to meet some new requirements. Closed-end funds must invest in at least three properties to diversify risk. Funds that do not meet this rule must have a minimum investment of EUR 20,000 as a hurdle for inexperienced investors. According to a letter from BaFin, however, the law does not include ship funds. They do not meet the criteria for investment funds because they are operational.
Judgments
In April 2014, the Heilbronn Regional Court strengthened the rights of investors to whom ship funds were recommended as a retirement plan. In the specific case (Az. 6 O 299/13) the bank is liable for advice that is not appropriate to the investment and thus has to repay the plaintiff 450,000 euros including interest.
Sources of information
- The sales or issue prospectus with subscription slip : The sales or issue prospectus is subject to prospectus liability and is checked by auditors who prepare a prospectus review report. Here the investment object, the general conditions as well as the opportunities and risks are described in detail. Other sales documents, however, are not subject to review.
- All essential agreements are contained in the articles of association. It is the contractual basis for joining. You should always read it and the trust deed in detail.
- The prospectus audit report of the commissioned auditor is usually sent to interested investors free of charge upon request. Here you can read whether the sales prospectus meets the IDW S4 requirements or whether there are material complaints. An expert opinion free of complaints means that the prospectus is correct, complete and clear. An evaluation of the offer is not connected with this.
- The certified performance record provides information about the experience of the provider and the results of previous funds and can usually be accessed on the provider's homepage.
- There are fund analyzes of different quality from different providers (e.g. Scope, TKL funds, GUB, kapital-markt intern, Loipfinger, Nerb etc.)
- There is specialist literature on closed-end funds that also describes ship funds and their specifics (see #Literature ).
- The Federal Financial Supervisory Authority (BaFin) provides an overview of the sales prospectuses permitted since July 1, 2005 on its website www.bafin.de under "Deposited assets sales prospectuses".
- Stiftung Warentest : Ship investments - ship piers go swimming. In: Finanztest . May 2013, p. 42 ff.
literature
- Max Johns, Christoph Sturm: The German KG System. In: Schinas, Grau, Johns (Ed.): HSBA Handbook on Ship Finance . Springer 2015, ISBN 978-3-662-43409-3 , pp. 71–86.
- Jochen Lüdicke, Jan-Holger Arndt: Closed funds. 6th edition. CH Beck, 2013, ISBN 978-3-406-64007-0 .
Web links
Individual evidence
- ↑ Heavy seas for HSH Nordbank . WISO contribution from December 14th, 2009, no longer available in the ZDF media library.
- ↑ zeit.de April 3, 2013: German shipowners have to scrap ships more and more often. The shipowners demand fair lending
- ↑ zeit.de March 10, 2013: Beware of subsidies. - The wave of bankruptcies in ship funds reveals how dangerous government-granted benefits can be for investors.
- ↑ FTD of February 15, 2008.
- ↑ Scope yearbook closed funds 2007/2008.
- ↑ Scope yearbook closed funds 2007/2008.
- ↑ Ship funds: This is how investors defend themselves against additional claims. test.de , April 16, 2013, accessed online on May 7, 2013.
- ↑ Focus Online, November 25, 2014
- ↑ VGF industry figures for closed-end funds 2011. (PDF file; 8.4 MB) Top 10 providers of ship funds - equity. (No longer available online.) VGF Association of Closed Funds eV, p. 30 , archived from the original on April 13, 2014 ; accessed on December 24, 2012 (as of January 31, 2012). Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ see also interview: You will never get black sheep out of the market (May 2013)
- ^ Exceptions to the KAGB , last accessed on June 2, 2014.
- ↑ Ship funds in distress , last accessed on June 2, 2014.
