Bloomberg News/Jasper Juinen

Amid a relative lack of distress in the U.S. market, some special situations investors have raised capital and added staff focused specifically on the shipping industry, which is itself undergoing a sea change.

From the outside, shipping looks like the kind of space that would naturally attract private investors. The industry is full of smaller players, typically families, and is ripe for consolidation. But the highly cyclical nature of the industry and the comparatively low yield of such investments don’t historically fit with the return expectations of most private equity firms, said Jonathan Montbach, senior vice president at investment bank Seabury Group.

“The U.S. market pretty much left it alone,” he said.

Private equity firms, particularly credit specialists, took a hard look at the sector in the immediate aftermath of the economic downturn, anticipating European banks would become distressed sellers of loans, said Ben Nolan, a director in the transportation research group at investment bank and advisory firm Stifel Financial Corp.

Years passed and that discounted debt never materialized, he said. Some firms shifted to buying ships outright, partnering with private shipping companies to manage the assets.

The trick for private equity firms is finding a way to exit these assets.

W.L. Ross & Co., which recently closed on $562 million for shipping-focused fund, was able in 2013 to successfully list Navigator Holdings Ltd., an owner and operator of liquefied gas carriers. But the firm halted plans in March for an initial public offering of tanker company Diamond S Shipping Group Inc. over price concerns.

Oaktree Capital Management appears to have found a way around the listing dilemma, announcing plans earlier this week to merge portfolio company Oceanbulk Shipping with Nasdaq Global Market-listed Star Bulk Carriers Corp. Oaktree will own 61% of Star Bulk’s shares upon closing the deal, presumably opening the door for a future exit opportunity.

The fickle public markets and a dearth of large players that could serve as acquirers continue to pose difficulties, and the industry faces ongoing challenges. European banks have clamped down lending across the board, limiting the potential for financing new vessels or refinancing loans that were made during the 2005-to-2007 period. The erosion of wealth that accompanied the great recession also cut into the holdings families could use to finance new vessels, said Mr. Montbach.

“There will be more pressure on owners of smaller fleets and vessels,” he said.

The industry is also slowly working through a supply-demand imbalance of new ships that were ordered prior to the onset of the financial crisis.

The glut of supply has caught the attention of investors including Z Capital Partners LLC, which recently hired Nicholas Petrakakos, a former executive at tanker operator Heidmar Inc.

“We’re exploring opportunities in shipping and related industries,” Z Capital Chief Executive Jim Zenni wrote in an email. “Numerous banks, particularly in Europe, are looking to offload assets in the wake of overbuilding in the industry.”

Mr. Montbach said he’s seen more private equity interest in the bulk space, which typically transport commodities, and tankers, which transport liquids such as crude, over container ships, which carry finished products between ports. W.L. Ross & Co. Chief Executive Wilbur Ross told LBO Wire that much of his recently closed fund has been committed to transactions in the chemical tanker and dry bulk sectors.

The demand for transporting U.S.-produced natural gas also is likely to give way to a whole new investment opportunity said Seabury Group’s Mr. Montbach.

However, success in that space is predicated on how quickly export capabilities can be developed, said Mr. Nolan. “As of today that area is over supplied,” he said, adding that he knew at least one owner of a new LNG vessel that had to wait months receiving its first cargo.

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