Rose ready for another shot at shipping but in a different guise
Apr. 10, 2015 /TradeWinds/ —
Former banker is back in the game and he is aiming to put the ‘science’ into investor relations
The rose of shipfinance is back in bloom but in a different colour.
Simon Rose is taking a new run at the industry four years after departing Dahlman Rose, the boutique investment bank he founded in 2004 along with partner Ernie Dahlman.
Rose’s new focus is not investment banking but rather investor relations. Can his Rose & Co do in that area what start-up Dahlman Rose did so quickly on shipping deals?
Rose and partner Rob Brinberg sat for an exclusive interview with TradeWinds near his new Park Avenue offices in Manhattan and explained why this is the new ambition after the finish of a long non-compete phase.
One of shipping’s most colourful characters combined the same sharp tongue with a new slimmer silhouette — “I decided to stop treating my body like a rental” — having dropped 65 pounds through a diet and yoga regimen.
“Shipping is 0.01% of the US equity market — no investor has to invest in shipping,” Rose explained. “Investing in shipping is not something you learn in school. There’s no tradition — you have to be taught it. Investors need to be created, they don’t exist in nature.
“One of our biggest contributions at Dahlman Rose was creating shipping investors, educating and proselytising, if you will.
“Shipping is a globally relevant industry but it doesn’t have an enormous importance in the US capital markets compared to other sectors. The education process and the creation of new investors can’t really stop when a company becomes public. The process has to be continuous.”
That, of course, is where Rose & Co hopes to fit in. When asked about the quality of firms currently doing investor relations, Rose passes on the question. What then, makes Rose different?
“I executed 42 public shipping financings,” he said. “To do a financing, you need to find a shareholder who will purchase securities for that company. There’s a scientific approach to finding those shareholders.
“We apply the same science to existing public companies without the pressure of a transaction. We bring capital markets experience to investor relations.”
Doubt Rose’s prospects at your own peril. How many were persuaded of the need for a boutique shipping investment bank when he started Dahlman in 2004? And yet the firm grew. And grew.
Dahlman Rose gained a reputation for hustle and punching above its weight as it elbowed onto deals as a supporting underwriter for the wave of shipping companies going public from 2005 through 2007.
Dahlman literally outgrew a few midtown-Manhattan offices as the staff mushroomed from a dozen to more than 200 at its peak.
But things got tougher both for shipping and for Dahlman with the 2008 world financial crisis, even with the bank’s expansion into adjacent sectors in energy and commodities.
Rose was widely viewed as being forced out of the chief executive’s chair in 2011 by the private-equity firm Dahlman had taken on to help fund its rapid expansion. The bank was later taken over by Cowen & Co, and its shipping presence has greatly diminished.
While away from shipping, Rose has spent a lot of time in the Hamptons on Long Island, where he bought a 1906-built mansion and oversaw its restoration into a private social club.
Rose refuses even now to discuss the circumstances behind his departure. But he did reflect a bit on the Dahlman Rose years and why another try at banking isn’t so appealing.
“It was a unique experience,” he said. “We built a very special brand. But I’m not looking backward at this point. What Rob and I are going to do with this business is special as well. It’s all about where you can add value.
“As an investment banker, I don’t think anyone was as prolific as I was. But I don’t see that the industry needs that now. The industry needs to focus on what’s already there and see that that’s optimised.”
There is also the toll taken by the banking experience.
“We competed every day with Morgan Stanley, Bank of America, Goldman Sachs. Do you know how hard that is? You have no idea. We were six people when we did our first deal, grappling with organisations that have thousands and 100 years of history. It’s just not fun. I’d rather be a service provider who helps people raise capital. We’ll work seamlessly with the investment banks and public companies and know our role.”
Asked to describe what kind of investors are currently present in shipping, Rose replied simply: “Disappointed investors.”
A lack of cash flows in several sectors has left buyers with a “wait and see” attitude, Rose adds. That is evident in how slowly investors have reacted to improved tanker rates. It also shows the work still to be done.
“That’s emblematic of a lack of investor interest,” Rose said. “When stocks don’t react to good news, you have a problem. No matter how hard you try, I’m not going to buy that red suit at any price.”
Rose & Co has found its first work with a website revamp for New York-listed boxship owner Danaos Corp.
That mandate is likely a good example of the technology focus that may separate Rose from some of its competitors in investor relations.
“In the same way that a storefront window is the most important advertisement for a company in the retail sector, shipping companies need to think about their websites as their storefronts,” said Simon Rose.
Website design is one way in which many owners are falling short of optimal communication with investors, maintains Rose & Co president Rob Brinberg, who joined Dahlman Rose years ago from the technology industry.
“While some shipping companies have developed nice websites, by and large you can date these websites to when the company went public — they don’t reflect the trends that have been established in the last seven to 10 years,” Brinberg said.
“A lot look very dated and have outdated messages that may no longer reflect the true strength or investment message of the company. Some have outdated technology that doesn’t allow the sites to render well on mobile devices, which is where consumers get a lot of their content.
“I’m always reading something on my phone. If I visit a website I can’t navigate, I quickly move along to someone else’s website. Establishing an appropriate online presence is extremely important for a public company or even a private company.”
To support their efforts in technology and other parts of investor relations, Rose and Brinberg have recruited an initial staff. Nora Huvane is joining to handle media relations. She is joining from the Marine Money group, where she has held a variety of positions since 2004. Two former Dahlman Rose staffers also are onboard at Rose & Co. Scott Grossman will handle data analysis and reporting, while Jonathan Rothman takes on operational and tactical duties.
By Joe Brady Stamford
10 April 2015, 00:00 GMT
Rose & Company is a strategic advisory firm dedicated to helping clients successfully navigate the global capital markets. We work with our clients to evaluate, define and execute strategies to enhance their presence in increasingly globalized and complex capital markets. For more information, please visit www.roseandco.com.