Q&A with Panos Xenokostas

Transcription

1 AUGUST 2018 V OL. 6 ISS U E 199 R E P O R T Q&A with Panos Xenokostas Founder of ONEX GROUP. Principle Series: Please join Family Office Insights for this evening gathering on Tuesday, August 14th 2018 from 12pm-2pm. If you care to join us, please admin@familyofficeinsights.com. Family Office Insights sits down with Panos Xenokostas of ONEX Technologies Inc. to discuss his pioneering and leading group in ship-maintenance and repairs internationally. He also has partnerships with leading industries for the implementation of projects and investments in the markets of Europe, Middle East and Africa. In Greece, he is involved directly and indirectly with outsourcing companies whose workforce amount 1,100 employees, a number that consistently and rapidly increases. The value of his companies has consistently increased over the last 7 years, despite the economic crisis. Family Office Insights is a voluntary, opt-in collaborative peer-to-peer community of single family offices, qualified investors and institutional investors. If you care to learn more, and perhaps join the community, you are welcome to visit us here at FamilyOfficeInsights.com P AGE 1

2 Q: Tell us about your background and your company, ONEX GROUP? A: My name is Panos Xenokostas I am originally from Greece, but for the past 5 years, I have been living in the United States. I have a strong aerospace engineering background, graduated from the Hellenic Airforce Academy and was an officer for 8 years. Throughout my career, I participated in many NATO exercises, working close with US forces and companies, positioned in many high level maintenance and industrial positions and focused on production, quality, operation and MRO for airplanes & engines. After seven years of working in that field I decided to quit (Retired with the rank of Captain) and start a business of my own. I started with something that was familiar to me: project management for constructions and defense projects so I founded ONEX GROUP. I grew this company over the past 14 years, working and developing in very difficult and complicated environments like North Africa, West Africa, NE Europe working always close with the US Government and other US top vectors. We are now active in defense technology, business outsourcing, information technology and material science/nanotechnology. My initial contact with the shipping industry was 10 years ago, because of a family connection. I found myself being a 66 percent shareholder of a small shipyard in Piraeus/ Perama Greece. I quickly became very familiar with the way of the industry; what the needs are, what the threats are, and where the opportunities lie. In addition, I leveraged my vast business network and connection of Greek supporters to establish a private ship-owning company controlling a fleet of 3 ships. For the past 16 months, I tapped into what was going on geopolitically in Greece. The Greek government announced an official tender, inviting bids for a project; in this case it was to bid for failed state controlled shipyard assets that another group was the primary contender. However, because of my experience in the defense sector and since I work very close with U.S. Government and the Embassy in Athens, we all agreed that it would be crucial to secure those assets from non NATO allies. The main reason this Shipyard is so important is because our shipyard is in a prime location, situated in the crossroads of the Black Sea, Mediterranean and Suez Canal. It was also important for the US Government to secure this asset stays under Western control as there is vested interest for this region from the US. The geopolitical factor alongside the energy crossroads and the situation in Northern Eastern Mediterranean make this Shipyard a unique safe service HUB. ONEX s foundation relies on our passion, which motivates us, to create ONEX as a symbol of growth and prosperity in times of austerity and hardship. I was responsible for showing both the U.S. and Greek governments that there is a huge business opportunity by utilizing these assets and the local expertise in Shiprepairing and ship-building for over 2 centuries as a shipyard and thousands of years as a region. Greece is currently recovering from 9-years of austerity and financial crisis, and we play a vital role in revitalizing their economy. This is the perfect timing for ONEX because Greece is in the process of a major turnaround. The reason why the shipyard was not working before is the same answer to the question, why Greece failed. There was a serious lack of business-mind in both the businessmen and the employees. Greek shipyards never got around to facing the reality of where the market was at, who the competitors were, and what needed to be done. Instead of the shipyards changing to extrovert attitude and adapting to automation and technologically friendly behavior, they asked the government for support. They simply couldn t survive. Most people in western economies are beginning to see impact in relations between the U.S. and Greece. Greece is a strategic partner of the US States and for the years to come is going to play a unique role in Defense, Energy & Shipping. Greece& Israel are the most important and trustful players for US. Macro to micro focus within the last few months since the privatization, has been for me, to establish trust with the shipyard workers: to show and express that I believe in them. I believe we could really make this shipyard a paragon for Greece, the Mediterranean, and for Western shipyards. We have all the ingredients needed to create something huge because the support of the government is here and the financial environment is perfect for us. We re fully backed by the U.S., so in the process of revitalizing Greece s economy we are also bringing the two countries together. P AGE 2

3 Since last February, through an intermediate company (controlled by me) we started working to improve the CAPEX and assets of the Shipyard by bringing customers to the shipyard and finalizing all the aspects of this acquisition which officially finished about a week ago by submitting our turnaround plan and acquisition for Courts confirmation (typical by Greek bankruptcy law). The remaining steps are procedural only, in order to have completed the transfer of ownership of the shipyard to my company (New SPV). Q: Who is your target audience? A: There are four categories of target customers. The first category is the ship-owners of vessels who operate ships such as: tankers, dry bulk carriers, service vessels, off-shore vessels, cruises etc. The second category is owners of mega yachts. The shipyard is well equipped therefore has the capability to serve mega yachts up to 86 meters and 2500 tons. The third category is special purpose vessels such as offshore platforms, jack up drills and offshore supply to exploit oil in the region. The equipment as well as the offshore platforms in the region that exploit oil need to be consistently maintained and maintenance / refurbishing for these vessels can reach up to USD $20 million. The fourth and final category of our target consumers is the military, for the servicing of military ships and naval vessels. We are a full service facility capable of servicing the majority of the ships in the region. We are focusing on US Naval Fleet, NATO fleet and Greek Naval fleet. Q: What are some of the challenges you face in your industry? A: I don t want to sound aggressive, but I can see no challenges. No challenges from the industry because shipping is a cyclical market, it goes up, then it goes down and repeat. If you re a shipyard based solely on building, you will have trouble when market is down, but ship repairing is different. Sometimes when the market is low it s actually more beneficial for us because the ship owners can t afford changing into new vessels. This means that they have to use their older ships that require maintenance. Also it is better for the ship owners to carry out all scheduled maintenance in a down market as the opportunity cost is lower; so we do get a lot more work when the ship markets are sideways. Generally speaking, ship maintenance is unavoidable, because it s enforced by law and by legislation. When the market is up and you are operating a shipyard that means time is money, and since we deliver the fastest service, when the market is up these ship-owners cannot afford to have their vessels in repair too long. Therefore, they increase our shipyards margins. So, market wise I see no challenges. Q: How are you different from your key competitors? Who are your key competitors? A: There is no competition locally in Greece. There is one smaller shipyard in Chalkis that cannot provide the services due to its size. There are another two shipyards in Eleusis and Skaramanga, but they are bankrupted. That being said, even if we had all these shipyards in full operation, the market is so sizable allowing healthy share of the market for everyone involved. P AGE 3

4 The regional competition is Turkey, Croatia, Romania and Malta. Turkey is our biggest competitor out of the four, but we are able to compete with them equally. When it comes to more complicated jobs, we are better and if we take into account the political risks of working with Turkey; we are the most desirable option. Turkey is suffering from domestic issues such as labor pushing for higher wages, which means unions and more problems. Same more or less happens with Romania, Croatia etc. Imagine that 10 years ago the Romanian fitter s monthly salary was $200 and now this number is around $800. Greek fitter, 10 years before, was $2000 and now is $1000. Quality wised, Syros Shipyard is the best comparing to the rest. The Greek employees basic cost starts from $800, approx. Furthermore, our business model is built on the concept of being more efficient than the competition. Our shipyard is operating every minute of every single day and that makes all the difference 24/7, 365 days. We deliver perfect quality, competitive pricing and faster servicing than anyone, which puts us way ahead of the curve. These three factors are what brings success to us and will pave the path for us to be way ahead of any competition. Q: How are you changing the landscape of your industry? A: I envision that our commitment to excellence will change what the typical ship-owner has in mind when he thinks about ship repairing and building stations in the Mediterranean. We are going to fully enhance systems to create a fully automated, fully transparent and strict environment and will work similarly to the aviation industry. I want to bring aviation industry s best practices to the world of shipping- repairing. We want shipowners to have an experience, to know exactly the timeframe associate with their ships downtime. It will be fully automated & time efficient and I believe that when we do that it will revolutionize the industry. This industry is not savvy right now and that s why we are working to make it more competitive and more creative. Beyond that, partnerships like the one with MAN are creating an one-stop-shop for ship owners will create loyalty and trust that will last a life time. Q: How much capital are you looking to raise? Who is your ideal investor? A: We are looking to raise USD $18M and the proceeds will be deployed toward the acquisition of a dry dock floating tank to service ships larger than 75,000 DWT at the AFRAMAX size. Our ideal investor is the one who understands the calculated low risk, huge upside and having excellent returns from an investment with an enormous social impact and national interest. Our ideal investor has to understand the political aspect and dynamics of this industry, as well as, the social value of this opportunity. Our investors have to be able to identify the opportunity of investing in a previously distressed asset in a previously distressed region that is turning the corner and can provide historical upsides. This kind of opportunity in business, economy and history doesn t come along often. Here in this corner of the world we have that kind of unique window of opportunity. Making money and changing the world to a better place at the same time is what we do. P AGE 4

5 We would prefer a more passive type of investor and that is the reason we are contemplating to offer debt for this raising. Currently, we are working with margins of about 30-35% and we forecast to be in the near term at 38-45% profit margin, once the acquisition of the new dock is completed. Q: What s your mission? A: To establish, create, and pioneer the leading group in ship-maintenance and repairs internationally, starting from this region. Q: What s next for you? A: Within the next two months I will be participating in an exhibition in Thessaloniki, Greece, amongst other great US companies like Microsoft and IBM. This is great exposure for the company during an event where Greece will be honoring the U.S. I am also focusing on expediting the capex improvements of the shipyard because that will double our volume. I want to also complete as soon as possible the raising to acquire the larger dry dock floating tank; acquiring this larger tank will complement the existing smaller two tanks and will increase the company s market share exponentially, as there is reduced availability of such larger sized tanks in the region. As mentioned above, this means we can have higher margins close to 45 percent. Profit margin from an USD $18 million investment for the larger sized tank would be an additional volume of USD $16-$17 million in just the first year, then in year two around USD $25 million. P AGE 5

6 Panos T. Xenokostas is an international entrepreneur, specialized in Diversified Investments in Sectors like Aviation Support, Advanced Material Science & Nanotechnology, Civil Protection & Critical Infrastructure Security, Energy, Ship building, Energy & Constructions and Business Outsourcing. He has expertise in high risk investments in new technologies and early stages companies, crisis management restructuring in challenging and complex environments. On February 8th, 2017 ONEX SA has been announced as the preferred bidder among eight competitors (Airbus, Thales, Rheinmetall, Intracom Defense, Indra and others) - of the Tender for a large-scale Land Border Surveillance Security System (LBSSS) by the Armament Authority of the Egyptian Ministry of Defense. The nominal contract value will be $ 52.7M for a 5-year period implementation, with option of rising up to $ 100 M for the same period. Xenokostas has been awarded internationally for his business achievements, environmental contribution through investments and innovation activities in business and science. In 2014 and 2015, he was awarded as one of the 10 best European Entrepreneurs by the European Business Awards institution, while in 2014 he received the Innovation and Creative Entrepreneurship Award by the Athens Chamber of Tradesmen. Additionally, he has been awarded by Lockheed Martin for his contribution during their long-lasting strategic partnership with the Hellenic Air Force. In 2013, he proudly represented Greece in CleanTech Open Global Ideas Competition in Silicon Valley, while last November the Group s nanotechnology company Glonatech participated for the second time to the finals of the same competition in San Francisco and was placed among the 5 best technologies globally with the innovative product NC52 for oil spills cleaning. Memberships include the Board of the Hellenic Public Radio of NY Cosmos FM., AHEPA New York, the American-Hellenic Chamber in Athens, the Hellenic-American Chamber of Commerce in New York where he is the founder of the Chamber s New Technologies Committee. He is also a member of the General Council of the Hellenic Federation of Enterprises (SEV), Leadership 100 and the Athens Club. He is supporter of the National Center of Scientific Research Demokritos and of The Hellenic Initiative. He lives in New York along with his wife and four children. If you have any questions, please contact Panos at dkoueli@onexcompany.com. P AGE 6

7 Working with family office investors is rapidly becoming a relevant strategy for accessing investment capital from the ultra-wealthy and their investment offices. Arthur Andrew Bavelas P AGE 7