Amid the drama of the London Stock Exchange’s £21bn merger with Deutsche Boerse, the sale of another London-based exchange company – much smaller, but not too much younger – went through without much bother this month.
Last week, the Singapore Exchange (SGX) completed its £87m acquisition of the Baltic Exchange, a City of London-based maritime marketplace and information provider.
SGX plans to keep the Baltic where it is – 38 St Mary Axe, in the shadow of the Gherkin and a short distance from where it was founded in 1744 as the Virginia and Baltick coffee house on Threadneedle Street – and make the building its European HQ.
But one thing will be changing for the Baltic. As Singapore completes its takeover, Mark Jackson, chief commercial officer of shipping agency AM Nomikos, is starting as the new chief executive.
Heading towards the exit door, 13 years after taking the wheel, is Jeremy Penn. His stint as captain of the Baltic comes to an end after steering the company through the choppy waters of an international bidding war to complete the SGX deal.
“It’s one of those major milestones in the Baltic’s history, there’s no question about that,” he tells City A.M. “I’ve been peripherally involved in a few deals before. But it’s the first time that I’ve been absolutely in the middle of one. And, of course, no business career is complete these days without such a thing. So it’s been very interesting. You learn a lot.
“There are periods of hard work and periods of exhaustion… it has been complicated to make it all happen. The Baltic serves a very wide range of interest groups. So it hasn’t been a simple transaction at all.”
Penn, who joined the company after 20 years at Reuters, says the Baltic has received “one or two approaches” down the years. But it wasn’t until late last summer that “actual numbers were talked about”.
After getting the go-ahead from shareholders, the board then appointed investment bank Nomura to handle the sale last autumn.
SGX eventually won an international bidding war – said to include China Merchants Group, CME Group, the Intercontinental Exchange (ICE) and information business Platts – to enter exclusive talks with the Baltic in May this year. They agreed terms in August, and it’s seemingly been plain sailing for the exchanges ever since.
How did Singapore win the race?
“We did have a few other approaches coming through the window. Some of which were really quite inappropriate,” says Penn, explaining: “Not all of the approaches we had were from other exchanges. They were from commercial entities who in some cases were associated with shipping already and so represented an interest group in some way.”
Penn, who declines to name names, adds: “It was about achieving a deal which we believed was good for the Baltic, good for its members, whilst being good for its shareholders. The Singapore Exchange was the best fit in terms of their grasp of what was important and how they wanted to deal with it.”
A big part of the Baltic’s draw to SGX was its intention to keep its UK headquarters.
“Why would you be anywhere else? London is still an extraordinarily important centre for maritime business of all kinds,” says Penn.
“And SGX, in particular, they want a Western base. So there’s no point buying yourself a Western base and then moving it to Singapore – that achieves nothing. And it’s a great opportunity for the Baltic to have a stronger infrastructure in Asia.”
Penn is adamant that the takeover of the Baltic is not a sign of the demise of London as a shipping centre.
“I would say absolutely the opposite,” he says. “I would say that this is a mark of the success of the Baltic and a mark of the continuing success of London in international shipping that a shipping centre.”
The Baltic, Penn says, has “always been hugely international” and before SGX took over was owned by Greek ship owners, major broking firms and a long chain of other individuals across the world.
“In terms of a dramatic change of ownership, I don’t really see it,” he says. “It’s one quite eclectic group of owners becoming Singapore Exchange, which has its own eclectic group of owners.”
And so, as Penn steps on to dry land and lets the Baltic sail off into the sunset, he is confident the company has a bright future.
“I can walk away thinking it was a milestone in the history of the Baltic that I was very much a part of,” says Penn. “And I think it will be a very positive milestone.”