| Ship Financing can be defined as the Third Party's Funds in order to purchase vessels by the Ship Owners.As the Ship Owners can not purchase New Building Vessels or Second handed Vessels with their own whole equity capital due to huge amount of vessel's price, they normally inject twenty to thirty percentage of their own equity capital and make loan seventy to eighty percentage of vessel's price through Financial Institutions when making new building order to shipyard or purchase second handed vessels from the market.Therefore, Ship Financing generally refers to huge amount, long-term, projective, high risk of financing,From the debtor point of view, Ship Financing can be classified into the financing by the commercial bank, financing through the general trading company, financing by the leasing company, financing through shipping funds.There are two main government-led ship financing system in Korea called as 'Structured Finance Ship Financing' and 'Ocean Going Vessel purchasing Ship Financing' which is enforced by government policy through government-owned bank in order to develop shipbuilding industry and shipping industry, but real upgraded Ship Financing in Korea can be considered as 'Ship Investment Company System'[Shipping Fund] which is new method of ship financing after passing the Ship Investment Company Law on July 2002.Unlike the existing government-led ship financing helping shipyard and shipping company through government-owned bank, Shipping Funds is a epoch-making Ship Financing System which not only gives individual investors and institutional investors new chance to invest on vessels, but also can secure twenty to thirty percentage of their initial equity capital through Ship Financing when purchasing new building vessels or second handed vessels. Since the adoption of this system till now, there was established more than 100 shipping funds including'Restructuring Shipping Funds'which was created in order to revive Korean shipping companies suffering in liquidity crisis due to 2008 American financial crisis.Shipping Funds is recently changing its foams of investment from the previous indivisual-participated public offering funds to the institutional-participated private equity funds and from the bond type funds refund fixed principal payment to the mixed performance-based funds. Furthermore, some Shipping Funds was introduced in the market with its pure performance-based funds that funds investor takes all risk regarding not only vessel purchase and sales profit, but also floating risk on freight earning as per shipping market.Therefore, as resulting from the thorough analysis on main ship financing system in Korea, this research has reached final conclusion that need to improve its present Shipping Funds system such as the vitalization of new trust-based shipping funds and need to adopt advanced financial system to improve Korea Ship Financing system in the long term. |
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