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29 Petros Pappas, Star Bulk Carriers

Led by Petros Pappas, Star Bulk has acquired an astonishing 48 vessels since the start of 2018, with most of its recent expansion financed by its own shares. Meanwhile, the entire fleet is being fitted with scrubbers as it moves towards sustainability

Greek shipowner wants to position his company as not only the biggest in dry bulk but also a leader in sustainability in the sector

IN the dry bulk sector, there are few personalities today who are magnetising more interest than Petros Pappas.

Since the start of his career as a shipowner — which kicked off in partnership with fellow Greek magnate-in-the-making George Economou before the duo amicably split, essentially over divergent appetites for risk — Mr Pappas has taken an uncommonly thoughtful approach to the industry. He has often erred on the side of playing it safe.

While risk-control can still be seen as an important ingredient in the culture of Star Bulk Carriers, the Nasdaq-listed bulk carrier owner he leads, Star Bulk’s image is probably better defined by Mr Pappas’ bold side.

Even after a period of slimming down its exposure to weather the dry bulk lean years, Star Bulk never relinquished its crown as the largest US-listed dry bulk owner and, since the start of 2018, it has acquired an astonishing 48 vessels.

In the latest in a string of eye-catching deals, the company agreed to acquire a predominantly supramax fleet of 11 vessels from Delphin Shipping, a vehicle of Kelso & Company.

The majority of the purchase price of $139.5m comprised $80m in cash, with the balance in Star Bulk stock.

However, overall, most of the company’s recent expansion has been financed by its own shares. 

Going into 2020, the fleet stood at 116 vessels of about 13m dwt, evenly spread between newcastlemaxes, capesizes and other larger types, its panamax and kamsarmax division, and the supra and ultramax sectors.

Star Bulk reinstated dividend payments in 2019 and has established a “transparent dividend policy” to which Mr Pappas says the company is committed for the longer term.

“Our hope is that by sticking to this dividend policy, investors will be well-rewarded and will value the company appropriately,” he told analysts recently.

Yet the resumption of shareholder payouts is not seen as shutting off acquisitions. In fact, Star Bulk would like to further advance its reputation as a consolidator in the sector.

“If the company is valued appropriately, we will have a currency that will allow us to finance accretive opportunities without walking away from this dividend policy,” he said.

Another priority for the company is to continue reducing its debt, with a longer-term goal of perhaps becoming debt-free, which would allow it to pay dividends in virtually any market conditions.

This vision is essentially that to which large publicly traded shipping companies have often aspired but have rarely been able to achieve.

Along with a highly incentivised management team that will be paid largely on how Star Bulk manages to outperform the market, 2020 is shaping up as a fascinating year for Mr Pappas.

He has also taken one of the industry’s biggest bets on exhaust gas-cleaning systems. The entire fleet is being fitted with scrubbers and 88 had been installed by November 2019.

According to Mr Pappas, he and his team extensively studied every aspect of scrubbers and he remains confident in scientific evidence that the technology is harmless to the environment.

“We were prepared for every eventuality — except the controversy it has caused, to be honest,” he says.

“We want to be not just the biggest company in the sector but to be a leader in sustainable dry bulk shipping.”

While hardly a publicity-seeker, Mr Pappas has not shirked a leadership role in many of the most hotly debated issues in shipping in the past couple of years.

Although he had not expected to be thrust into the limelight because of scrubbers, he has been one of the leading advocates in the industry for slowing speeds to curb emissions.

Star Bulk is one of the first bulker specialists to join the Global Maritime Forum, as well as its Getting to Zero Coalition that is pushing towards full decarbnisation of the industry. 

In addition, it has become one of the first shipowners to publish an annual sustainability report.

Mr Pappas also appeared in the Top 100 in 20132014201520162017 and 2018.


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