Ask Mark Nieuwland about his finest hour as CFO of CFL, and he’ll tell you that it was the moment he realized that the financial partners of the Dutch shipping company were willing, even at the deepest point of the European financial crisis, to finance its operations and expansion plans. Without asking an outrageous risk bonus. Nor did they negotiate punitive conditions for prolonging existing contracts or closing new deals.
‘As CFL we try to be as open and transparent towards our financial partners as possible, and this policy has worked ever since,’ says Nieuwland, both participant and board member. ‘This pays off, especially in these harder times for maritime financing and the industry as a whole. Now we have a competitive edge, meaning that we pay lower interest costs and therefore indirectly save ourselves and our investors a substantial amount, and we are able to invest anti-cyclically. At the moment we are financing a new generation of vessels, the Caranx Type. So far both banks and a wide range of informal and institutional investors are very interested in participating in the program. This, in my opinion, is largely due to the fact that we have a track record of being transparent and financially reliable.'
Mark Nieuwland is the co-founder of CFL. A business law graduate, he entered the world of finance by becoming an associate with an investment bank. Later on he specialized in project funding with FMO (a Dutch government-owned investment agency for emerging markets) and used his acquired expertise by creating FinShip, a consultancy firm in the field of maritime finance. ‘It was at this point of my career that I ran into Kees Koolhof. Or, more accurately, Kees ran into me. He approached us to support him with setting up CFL, which was then only an elaborate idea. I felt intrigued by his ambition and eventually decided to join him.’ Eight years later, Mark is a stakeholder and responsible for funding CFL’s ambitious operations and growth strategy. As a start-up CFL chose a different path; building a fleet of Dutch built eco-friendly vessels sailing under the Dutch flag according to current market specifications and creating an organization to support and sell this capacity.
After successfully arranging the funding for a series of 6 Jumbo 6500 Types (the first generation of multipurpose vessels co-designed and developed by CFL and partner Peters Shipyards) to be newly built, the focus of his work gradually changed. ‘The crisis set in and the market for marine transportation became a grim place to be for most operators, especially in bulk and containers. Although CFL is a positive exception because of our focus on high-yield project cargo, we too need to be more creative and innovative than our competitors. Also in the field of finance, our challenge is to excel in two fields: in creating the best opportunities for our existing financiers to make a profit, and to fund the expansion of our fleet.’ Considering the first, Mark Nieuwland has proven to be an innovative CFO. For instance, under his direction CFL was the first Dutch companie to benefit from an enhanced fiscal incentive program for shipbuilding in the Netherlands. The so-called regulation for arbitrary depreciation offered private and institutional investors in CFL-vessels the opportunity of a two year amortisation, and therefore the fiscal reimbursement upfront of a large part of their investment. This made it possible to finance the Jumbos and the first two Soles (tweendeckers of 10,000 DWT, especially equipped for the high-yield transportation of project cargo) with a range of smaller participations by mostly private investors. ‘At the moment this regulation is closed, although there are strong rumours that our Secretary of Finance is considering a re-launch to vitalize capital investments. For the time being, we are examining whether similar depreciation programs in Spain and Belgium are fiscally appealing for our investors and under which conditions.’
> Expanding network
CFL and Mark Nieuwland are also rapidly expanding their network of financiers. The growing scale of the company and its strategic market position is attracting more and more institutional investors, family firms and private equity providers. The last four Soles that were recently acquired were all funded by players with an extended portfolio. And after closing the deal with Houston-based Intermarine, CFL became well known in the circles of American marine investors too. ‘We initiated the deal in 2012. Houston-based Intermarine, a marine logistics provider and, like us, specialized in project cargo, wanted a stronghold in Europe. We came up with the idea of merging Intermarine with Scan-Trans, a Danish project cargo operator in which we had a material participation. In exchange we are now closely related to a player with the most extended commercial network in our line of industry. And this valuable partnership also gives us access to their financial network in the US.
‘One of our Soles is financed fully by CIT, a leading American investor in overall mobility. All in all we are currently maintaining long term relations with over 40 financial institutions all over the world. To illustrate this: we were asked by Marine Money, organizer of one of the most important events in international maritime finance, to co-host last year’s Hamburg-edition.’
At the moment Mark Nieuwland divides his time and creativity between providing a solid cash flow and financing the future of CFL. Although the two of them are closely connected, says Mark. ‘Cash must be king. In order to finance our current operations and keep a clean track record with our investors, we need to maintain regular earnings. Therefore it was important that we chartered out two of our newly built vessels to Intermarine under very favourable conditions and divested three Jumbo Type vessels. This guarantees us a steady source of income and reduces our downside risks in the medium and long term.’ A new financing challenge lies ahead. Negotiations about building a series of new generation CFL-vessels, the Caranx Type, are well advanced. ‘For someone who is captivated by the world of maritime finance, these are very promising and challenging days.’