About 90% of world trade is carried by ships. Seaborne trade is estimated to have quadrupled over the last 40 years through the globalisation of resources and raw materials, and the import-export of food and manufactured goods which has turbocharged the growth of container shipping which had scarcely existed before. Tech advances have made ships – arguably the world’s oldest transport system – into an increasingly efficient method of transportation on which the world depends.
That’s the context for Informa’s recent £385m sale of its Lloyd’s List maritime intelligence division to Montagu private equity. The composition of the legendary shipping information business has varied over time. But it’s a story of how a company whose revenue has scarcely increased since it was first sold-off by Lloyd’s insurers in 1995, has seen its valuation multiply almost five times in 27 years:
| Revenue | Op profit | Valuation (pe) | ||
| 1995 | Buyout from Lloyd’s | £38m | £4m | £ 83m (21x) |
| 1997 | IPO | £44m | £9m | £138m (15x) |
| 1998 | Merger with Informa | £45m | £10m | £150m (15x) |
| 2022 | Sale to Montagu | £43m | £15m | £385m (x26) |
Perhaps more surprising than the soaring value of a strongly-branded B2B business, long on subscriptions and digital content, is the absence of serious M&A to match the globalisation of the maritime industry itself. That may now change.
Ironically, Informa had once discussed merging Lloyd’s List with the $300m IHS Maritime & Trade portfolio including the Journal of Commerce, which is now part of the $117bn S&P Global. But that was before the pandemic – and Informa’s strategic course correction that produced divestment proceeds totalling £2.5bn for its shareholders.
Montagu executives will be reading up the background of the 195-year-old Journal of Commerce. What was formerly a daily newspaper (like Lloyd’s List itself), is now a twice-monthly magazine and digital service. The ‘JOC Group’ also includes the International Maritime Organisation’s ID register of ships. But you would have trouble finding it on the new S&P Global website. It is buried deep in the Marketing Intelligence portfolio which itself had the lowest revenue growth and lowest operating profit margin of all S&P divisions in 2021. It is easy to believe that the parent company, which is 66% dependant on powerful ratings and pricing operations including Standard & Poor’s and Platts, will demerge or divest some (or all) of its “intelligence” activities.
The JOC might be among the first on the block, and it is difficult not to link any possible divestment with an independent company called FreightWaves. The fast-growing, five-year-old, Tennessee-based business has so far raised a total of $90m venture funding. It openly models itself on the wrap-round news, information, digital media and video of Bloomberg, even describing itself as “the Bloomberg of freight”.
But, unlike the financial services monolith, FreightWaves’ founder Craig Fuller has his eyes firmly on future consolidation. How else would you explain his quarterly revenue announcements? His latest numbers show the company finished Q2 with 91% annual growth and a ‘run-rate’ of $44m. Much of the content is free but the growth has been propelled by subscriptions for SONAR, the company’s four-year-old proprietary market analytics platform. It recently added Container Atlas, a dataset covering global ocean container markets, and continues to grow TRAC, its trucking spot rate data platform.
FreightWaves revenue has been forecast to reach $100m within two years. That might just be the target for an IPO and/or major M&A.
Fuller is a man on a mission: “Global logistics is a $9.6 trillion industry, almost 12% of world GDP. We’re talking about an industry that is so critical to our economy but is very fragmented. What FreightWaves does is take anonymized data from sources from all over the world that are providing real-time analytics regarding the movement of cargo, and effectively, we get to see the world’s economy move in near real-time. FreightWaves readers and clients use the data to make better pricing decisions, to figure out what capacity looks like, to help determine how they should think about pricing freight.”
Initially, FreightWaves didn’t have any journalism “but we soon realized that, in order to create a liquid futures market, there has to be a news business that really talks about what’s happening.”
The editorial recruits included experienced people from Reuters, Platts, IHS and Morningstar. Almost one-third of the 200 headcount are content writers and producers (divided between text and video). Journalism is much more than the wrapper for high-value data services and Fuller has started buying up traditional media like the long-established magazine American Shipper. That Blomberg-like investment in digital text and video journalism is what has long attracted Fuller to Lloyd’s List, the Journal of Commerce, and also to Seatrade Maritime, the magazine-turned-events group (still owned by Informa).
FreightWaves had wanted to acquire Lloyd’s List but it was sold in a broker-less deal personally negotiated with Montagu by Informa CEO Stephen Carter. The private equity company had earlier acquired Informa’s EPFR Fund Flow Intelligence for £162m – and happened also to have been an original investor in the 1995 buyout from Lloyd’s. At the price (9x revenue and 25x operating profit), nobody could complain about the sale process. But it may have left FreightWaves pondering how best now to internationalise its business.
We have an idea.
Almost wherever you read about “shipping”, you come up with Drewry, the London-based international shipping consultant which has punched well above its weight for the past 52 years. It’s the authoritative brand name that accompanies pervasive online and print forecasts about shipping, world trade and the supply chain.
The company was founded in 1970 by a Paris-based shipbroker George Drewry. During its early pre-internet years, it built a sound reputation as an aggregator of information and research about shipping. But, by 2000 when the founder wanted to sell the company to his team, its business comprised just £1.5m of revenue, a pension deficit, and a London office building.
In the event, it was acquired by the company’s then managing director and also a maritime industry investor and entrepreneur Arjun Batra. A former merchant navy captain and shipbroker, Batra had been a longtime shipping industry consultant. He was also co-founder, with Stelios Haji-Ioannou, of Easyjet after being inspired by London-Athens Virgin franchise flights heavily used by UK-based Greek shipowners.
Over the past 20 years, Batra has led the internationalisation of Drewy by opening offices in Delhi, Singapore and Shanghai. He has pushed the company strongly into consulting/ advisory work which now accounts for some 60% of revenue, with 40% from research/ publishing. It now has an estimated 800-900 subscribers and undertakes some 200 consulting and due diligence assignments annually for an audience that divides between the supply chain of shipper-customers and the owners-operators of ships, ports and terminals.
Shipping executives will tell you Drewry is the “only” company to offer both advisory and research services for the maritime industries, especially container shipping where it has created pioneering indices and pricing information. In some ways, Drewry’s impressive portfolio of products and services in containerisation (which had existed for scarcely a decade when the company was founded) underlines the challenge it faces. In shipping (like so many industries) brokers and advisors are pumping out increasing volumes of free information and data (some of it high-quality) as an “added value” competitive weapon in a highly price-sensitive market.
That’s especially true in the oil and bulk shipping markets in which Drewry made its reputation. But the fragmentation and inter-modal complexity of containers and and also of ports and terminals remain substantial revenue earners. It’s not the first company to understand the near-commodisation of so much data but also the uniquely high-value of forecasts as a way of quantifying the opinions of researchers. Drewry’s role as an interpreter and forecaster of shipping and supply chain trends is a key strength and, presumably, will be key to scaling up a company which many of its customers think is already substantially larger than it is.
Drewry (which employs some 80 people) has revenue of some £10-12m and 25% profit margins. While Batra (now the owner) regularly turns away the enquiries of would-be acquirers, the Lloyd’s List deal must have made him think about the possibility of his neat, little consulting-research company with a big worldwide reputation fetching something like £75m (25x profit). You can surmise that an acquirer would benefit from current moves to ensure that all Drewry research and data is available ‘live’ online rather than published as 200-300-page quarterly reports.
As FreightWaves (whose website includes some Drewry data) considers its options for international growth, the idea of an IPO will not be far from the thoughts of Craig Fuller. He might think that acquisition of the under-wanted Journal of Commerce and of Drewry would also appetise Lloyd’s List investor, Montagu. Together, they could create a $500m-revenue worldwide maritime intelligence group. A stockmarket listing might suit them all.
Time to sharpen the pencils.
