Blohm+Voss, world famous in shipping circles for building the Bismark and Scharnhorst, was snapped up last year by investors who foresee a bright future in building megayachts that top the 260-foot benchmark established with the recent buildings of Mayan Queen IV, A, Palladium, and Eclipse. London-based Star Capital Partners took over all non-military sectors of the business from ThyssenKrupp Marine. The acquisition, reported to have cost just $195 million, included the Blohm+Voss shipyard as well as the megayacht construction and repair divisions. Dr. Herbert Aly, Blohm+Voss’ managing director, spoke frankly to Megayacht News about why the acquisition was sought and what has resulted. He also talked about what he sees as benefits of the non-disclosure agreements that are becoming so prevalent in the upper end of the megayacht market.
MYN: What convinced you that Blohm+Voss could find the right financial partner in the worst economic crisis of modern times?
HA: We are a strong brand and as such are well-known worldwide. This is especially true when you consider our new-build activities, our complex repair, refits and conversion activities. Then you must take into account our long track record as a leading component and service supplier for the global shipbuilding and oil & gas industry. Altogether, in combination with a skilled team, the strong backbone of German engineering and a sound strategy in place to expand in quality markets, I knew we would find shareholders eager to invest into the brand.
MYN: How does Blohm +Voss stand apart from other shipyards targeting the same super-size superyacht market?
HA: We have the proven experience and the in-house technical expertise as well as the capacities that enable us to offer tailor-made solutions for the most demanding buyers in this market. Ultimately, customers seeking to commission a unique and very large motoryacht to their precise needs and requirements will always end up contacting us. We are known as those who always make the extra effort to perfectly meet the customers’ expectations in fully customized projects.
MYN: It is now over a year since the shipyard was thrown the lifeline from Star Capital. How has the year been spent, and what have you achieved during that time?
HA: After the adjustment to the corporate structure of the new investor, we had to get back across to the market that Blohm+Voss remains in the picture as an interested and serious player in the market for megayachts. Having meanwhile various inquiries and promising projects under development in that segment, it proves that our approach was right. All businesses performed better than shown in the previous plans, which is a strong indication that our strategic direction is a sound one.
MYN: Without the intervention of Star Capital, what do you think would have happened to the superyacht building and refit division of Blohm+Voss?
HA: Our former owner had lost interest in non-naval shipbuilding as a whole and decided to sell that part of activities. They had made clear that, otherwise, they would discontinue their shipbuilding activities at the location in Hamburg, meaning the closing down of the activities.
MYN: Tony Mallin, CEO of Star Capital, said publicly, “we intend to invest by providing a significant capital commitment to drive growth and job creation.” Can you explain what has been received to date?
HA: The capital commitment of Star Capital Partners provides a strong foundation for a long-term partnership. That means that Blohm+Voss has got the chance to continue as a solid and reliable partner to our clients in the complex megayacht business and hence secures future business and jobs. We have, for example, recently received comprehensive new orders at Blohm+Voss Repair for the lifetime extension of two floating production storage and offloading units, and several cruise ships have been docked in 2012 and will do so in 2013 and 2014, too. Besides the motoryacht Project Graceful under construction, we are also working on several promising new-build and refit projects for very large motoryachts.
MYN: Shortly after the deal with Star Capital was completed, you said, “Opportunities exist in each of the markets within which the businesses operate. We hope to take advantage of these opportunities with the backing of our new owners, who share our vision for the business.” How successful have you been in reaching your goal?
HA: In two of our businesses, namely the ship component and the pipe-handling equipment business, we have outperformed the shareholders expectations already. Accordingly, we have all options open. Ship repair and conversion business also has performed better than expected, given the actual market and competitor situation, which allows us to continue this successful growth story. Regarding megayacht new building, we always knew that it would take some time to retrieve the customers’ confidence after the hesitation shown by our former shareholder. This uncertainty has come to an end now, and we are well received by the market again with respect to upcoming serious projects.
MYN: Where in the world do you think the new superyacht owner will come from?
HA: I think that as in the past years, megayacht owners will mostly come from Eastern Europe and the Middle East. Emerging markets in South America and Asia have and will surely generate high-net-worth individuals interested in motoryachts. However, I think that it will require much more time to go before such long-term potential will reflect in the market for very large megayachts.
MYN: Blohm+Voss and other shipyards are often tied into signing NDAs. Is this, in your view, good or bad for the industry?
HA: For us as the building shipyard, there is no other choice other than to follow the owner’s expectations, and to professionally deal with confidentiality is a significant part of our brand awareness. It might sound easier to be allowed to show to interested new owners pictures if we could, but not being allowed to do so also gives a special aura of extreme exclusivity to our work. Furthermore, the megayacht world is a small one, owners know each other, meet onboard, and talk between themselves. A recommendation from an owner is, in our opinion, a lot more valuable than anything having been done by us. All in all, I do not think that it is bad thing for the industry.
MYN: Blohm+Voss has not yet joined SYBAss. Is this a conscious decision, and if so why?
HA: Blohm+Voss was told by SYBAss to hold off its application until the market received a vote of confidence that our shipyard will remain active in the field of new builds. This has been demonstrated, but presently we have no plans to apply for SYBAss membership.
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