Financing sustainability

2021 saw the launch of a new, seventh, division at Damen: Damen Financial Services (DFS). You wouldn't expect it when you read the name, but this really does represent a major boost for our initiatives in the field of sustainability.

Using both operational and financial lease constructions, DFS supports clients with financing for new vessels and other maritime assets. In itself, there is nothing new about Damen helping its clients to raise finance for new vessels. We've been doing that for thirty years now.

Basel IV

“But demand for leasing solutions is on the increase,” explains Jan Willem van Helden, the DFS managing director. “Most banks have moved out of long-term financing, not just for ships but also for other capital assets. That is a response to, among other things, new requirements from the banking authorities. To offset long-term loans, banks have to have more capital than before, in part because of the ‘Basel IV’ standards.”

“Now we have established a separate group entity for our leasing and other financing arrangements, we can work with external investors, banks and specialists to optimise our offering on both the large and smaller scales, with vessels and services as a single package.”

Ship-as-a-Service

The benefit for Damen's customers is that they can treat their capital investment as ‘OPEX’, operational expenses. For Damen, the extra service means that we can offer a broader package, including maintenance. That allows for things like a better approach to the more sustainable deployment of the ships. Van Helden: “This brings Ship-as-a-Service and circularity in shipbuilding a step closer. In addition, from a governance perspective, the new service means we have a clear picture of how the financing is structured.”

First InvaSave for Namibia

The first long-term contract for the deployment of Damen's InvaSave is with Heat Exchange Products in Namibia. The containerised system will be used for the next five years in the port of Walvis Bay to treat the ballast water from visiting ships.

Marine vessels take that ballast water on board in large quantities to offset unloaded cargo or waste and then discharge it at the ship's next port of call. This discharge typically contains a multitude of viruses, bacteria, and other biological materials, including plants and animals collectively referred to as invasive species. The inadvertent release of non-native and nuisance species in ballast water has already triggered extensive ecological damage, with a knock-on effect on the economy and human health.

Fishing grounds

“As Namibia is keen to protect its rich fishing grounds, it has called in the support of InvaSave, currently the only system to be certified by the International Maritime Organisation”, says Friso van der Meijden, Customer Finance Manager at Damen Shipyards Group. “The deployment of InvaSave was made possible by the alliance between Damen Financial Services and Climate Investor 2.”

This is a financing facility mandated to invest in water, sanitation and ocean infrastructure projects in emerging economies. It enjoys cornerstone support from the EU and the Dutch Fund for Climate and Development (DFCD). The consortium that manages the DFCD – which amounts to 160 euro million – also includes the World Wide Fund for Nature Netherlands, and the Netherlands Development Organisation and Entrepreneurial Development Bank, FMO.

Preserving marine ecosystems

CI2 is making up to 25 million euro available. The funding will enable clients in emerging economies in Africa, Asia and Latin America to benefit from this Damen innovation as well.

Tarun Brahma, CFM's Head of Investments, states: “The Damen project represents an exciting opportunity to get ahead of the growing demand for ballast water treatment, whilst also contributing toward climate adaptation and preserving the future of marine ecosystems.”

Purus marine: significant positive environmental impact

One of the first partnerships Damen Financial Services has entered into is with Purus Marine. This is an environmentally focused maritime vessel and infrastructure company established by EnTrust Global for the financing of green shipping projects.

The partnership, working under the name DP Lease, aims to provide client-centric, flexible and attractively priced long-term lease financing solutions to solve the financing gap created by additional capital expenditure requirements associated with the purchase of environmentally-advanced vessels. DP Lease aims to support the decarbonisation of the maritime industry.

Julian Proctor, CEO of Purus Marine, says, "We believe DP Lease will provide its customers with bespoke vessel financing. Not only is that cost-effective, it also delivers a significant positive environmental impact. With its track record in the construction of fully electric tugs, ferries and dredgers and its practice of standardised shipbuilding, Damen is well positioned to facilitate the fast delivery of a reliable fleet of sustainable vessels.”

Floating money

The water hyacinth is a beautiful plant with a stunning purple flower. However, the invasive species from South America is also blocking pipelines and waterways in and around Lake Victoria. “It can become the fuel of the future.”

Kisumu city on the shore of Lake Victoria is Kenya’s third largest city and a hard-hit victim of one of the world’s fastest-growing floating water plants. The water hyacinth threatens the health and wealth of millions of people who live and work next to or on the lake. Health risks are increasing because of the mosquitoes and snails, toxic algae and bacteria that flourish in the weeds. Important functions of the lake, such as transport, tourism, fisheries and drinking-water supplies, are coming to a standstill.

Jumbo Weed Harvester

“Our Jumbo Weed Harvester has been an excellent solution for the problem for some time now,” explains Marcel Karsijns, Product Director Civil & Modular Constructions at Damen Shipyards. The ‘floating combine harvester’ collects the water hyacinths and transports them to shore. “The point is that something has to be done there with all that material. And that is possible.” Digesting the biomass produces methane gas and a residue that can be used as a fertiliser. “That gas can be used by local communities for cooking, for example. So they can stop using their coal-fired ovens, which are very bad for the environment and for health. Everyone benefits.”

“In the past, we looked only at the vessels we could deliver. These days, we go for the total solution,” continues Karsijns. “In collaboration with local companies and the University of Nairobi, for example, we are looking at the best way to transform the hyacinths into biofuel. But the business case has to be right as well. That’s why we collaborate with Damen Financial Services.”

Coalition of the willing

“Together with my team, Josue Sanchez Paucar from Peru and Roosa Joensuu from Finland, we are looking at how to structure this financially”, explains Geert de Jong, Group Corporate Finance Manager. “Our aim is to team up with other departments such as Civil & Modular Construction to find a financial solution that is scalable. We are keen to proactively approach the market.

This also requires investigation on how many hyacinths you need for a given amount of gas. What kind of investors and off takers can we involve? These are the sort of questions we look at and tackle step by step. Ultimately, we need a coalition of the willing to realize the great technical solutions Damen is able to offer. Because apart from the fact that there is value in the lake, the main thing is that it will be a tremendous help for the local community of Kisumu.”