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AUGUST 8, 2005
Shipping That's Not All In The Family In Greece, a new generation of tycoons is bringing transparency to an industry long shrouded in secrecy In the U.S., children grow up wanting to be pro basketball players; in Europe, star footballers. But Evangelos J. Pistiolis is Greek, so he dreamed of running his own shipping company. "I liked shipping the way [Salvador] Dalí liked painting," he quips. So Pistiolis enrolled at Britain's Southampton Institute of Higher Education, earning a masters in shipping operations. Then he put in a two-year stint with the Greek navy. By the time he was 27, in 2000, Pistiolis had bought his first ship with help from his father, a wealthy contractor. Last July he took his company, TOP Tankers Inc. (TOPT ), public on the NASDAQ, raising more than $146 million. Forget about Aristotle Onassis and Stavros Niarchos -- there's a new generation of Greek shipping tycoons in the making. Besides Pistiolis, it includes Nikolas P. Tsakos, 42, of Tsakos Energy Navigation Ltd. (TNP ); Victor S. Restis, 36, of Restis Group; and Angeliki Frangou, 40, of International Shipping Enterprises. These guys are just as comfortable around balance sheets as they are around ballast tanks. They hold degrees from foreign universities and sprinkle their conversations with Wall Street lingo, such as return on capital. Pistiolis' crowd generally keeps a low profile. Just about the only Greek shipping scion making headlines these days is Paris Latsis -- and that's only because the 27-year-old heir to a reported $7.5 billion shipping fortune is engaged to hotel heiress Paris Hilton. "The new generation of shipowners are better-educated and better-trained than Onassis and Niarchos were when they got started," says Nicholas Gage, author of Greek Fire, a biography of Onassis. "And they are running their companies on more sound business practices while seizing the opportunities the current shipping boom is providing." The boom is being driven by surging demand for oil and other commodities in fast-growing economies such as China and India. That demand -- coupled with a short supply of sturdier, less polluting vessels -- has propelled oil-tanker rates to their highest level since the oil crisis of the 1970s. These trends have in turn bid up the shares of tanker companies, a business in which Greeks control close to one-third of the world's tonnage. The dry-bulk segment of the industry -- which covers grains, coal, and iron ore -- is also controlled by Greeks, and is also booming. DryShips Inc. (DRYS ), a Greek bulk carrier, raised $269 million in a February offering and just reported an 80% jump in first-quarter net income, to $19.1 million. NEW SHIPS NEEDED DryShips is one of a half-dozen Greek shippers that have floated shares in the past year, raising more than $1 billion among them. TOP Tankers' shares are up over 50% from an initial offering price of $11, and other shipping stocks are soaring, too. The IPOs are bringing new transparency to what was previously a murky business dominated by powerful families. "Family money and family management are no longer competitive with public markets," says James Christodoulou, chief financial officer for Prime Marine Management Inc., an unlisted Athens-based company. The scramble for capital has intensified in the wake of environmental catastrophes such as the Exxon Valdez and Erika oil spills. "After the Exxon Valdez disaster, we could see that old ships would be phased out," says Tsakos. His company unloaded the last of its old, single-hulled vessels last year and has used the proceeds from the sale of its shares to buy a fleet of 25 vessels with an average age of just seven years -- all double-hulled, as required by European and U.S. regulators. There are those who fear that a recent retreat in shipping rates could signal an end to the two-year-old, China-fueled boom. But those who track the industry say that with China's economy forecast to roar ahead at a 9.6% growth rate this year and India growing at 6.9%, tanker and dry-bulk demand will remain strong. For the new generation of Greek shipping executives, it looks like a smooth cruise ahead.  By Alkman Granitsas in Athens Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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