Zim Files for Initial Stock Offering on the NYSE
Zim filed a preliminary prospectus with the U.S. Securities Exchange Commission on December 31, 2020, for its long-anticipated initial public offering. The container and logistics company plans to trade its shares on the New York Stock Exchange becoming only the second container line after Matson to be listed on the Big Board.
Terms of the offering are not included in a preliminary filing, which is submitted to the SEC for review and approval, but the Israeli news outlet Globes reports that Zim is targeting raising between $300 and $500 million in the offering, which would give the company a market value of $1.5 billion. The offering, which is being led globally by Barclays, Goldman Sachs, and Citigroup, would provide Zim with funds to support long-term growth initiatives. The prospectus highlights that they do not have specific plans for the proceeds, but that its uses would include investing in vessels, containers, and other digital initiatives, strengthening the capital structure, fostering financial flexibility, or possibly to service or repay certain outstanding debt.
Zim has been openly discussing its goal of running an IPO for months. The company had taken several steps to improve its financials, including the early repayment of $55 million in debt in September. The timing of the offer, which is expected to be completed by late January, is seen as a move to leverage the strength of the global container and logistics markets.
Zim's most recent financial results show a strong performance with revenues up more than six percent in the first nine months of 2020 to over $2.6 billion. The adjusted net profit for the first nine months of the year was nearly $176 million versus a $10 million loss in 2019.
The draft prospectus lays out the investment case for Zim highlighting what they call their “asset-light model,” along with a flexible structure focused on niche routes and markets. The global network includes 66 weekly lines calling at 310 ports in more than 80 countries.
Zim highlights that it currently only owns one vessel while it charters 69 vessels, which they compare to competitors which they report own 44 percent of their fleets. Zim says that nearly 99 percent of its TEU capacity, which is approximately 359,00 TEU, is chartered. The majority of the vessels they operate are mid-sized with a capacity of between 3,000 and 10,000 TEUs, giving it the ability to service niche routes not fully serviced by competitors. In 2019, Zim reports it carried a total of 2.8 million TEU.
By operating with a charter fleet, Zim contends that it can quickly adjust capacity in anticipation or in response to changing market conditions. Currently, nearly 80 percent of the fleet is under leases having a remaining charter duration of one year or less.
Found in 1945, Zim says that it currently services five trade zones. The Transpacific is the largest, accounting for 39 percent of the TEUs carried, followed by the Atlantic, Cross Suez, Intra-Asia, and Latin America. Examples of the niche routes they highlight are the US East Coast and Gulf to the Mediterranean, the eastern Mediterranean and Black Sea to the Far East, and the Far East to the US East Coast. They also highlight their new premium high-speed services which move freight from China to Los Angeles and Australia. Focused on time-sensitive cargo, they believe these services provide an alternative to airfreight.
One area of growth that Zim highlights is on its Transpacific routes. The company says it is currently exploring long-term lease arrangements for vessels that could reach 15,000 TEU. They would replace smaller vessels on the route, expanding the capacity as well as being among the largest ships in Zim’s fleet.