What better way to start the new year off than with a post about another private navy? lol The last couple of years, I have been posting about the Jardine Lloyd Thompson CEP ‘private navy’. With that venture, they made a lot of promotional announcements, but never got it off the ground. Funding of such a thing is the problem, and we will see how this new private navy venture by Typhon does in their drive to get set up.
So lets look at the business model, as was stated by Typhon in January of last year.
“A huge difference between our model and others is that we will negotiate reduced insurance rates. Rates have skyrocketed because it’s costing the industry $10bn-$12bn a year when you add everything up. Ransoms alone are $800m-$1.2bn.”
South Korea reportedly paid $25m to reclaim a ship last year. “And then that’s the new bar. It throws out Lloyds’ actuarial valuations,” says Sharp. “You have no idea what to charge as a premium. For my clients, we can take out some of the risk. I’ve got a letter from a Lloyds broker saying we can offer a 50pc discount on rates. That more than caters for our services.”
You know, in fairness to potential clients, the company should post that letter from Lloyds on their website. Matter of fact, they should do a lot of things with their website in order to spell out exactly what they are all about because it is ‘vacant’.
Furthermore, when a company puts it out there that it is recruiting 240 former Royal Marines, you kind of think there would be some talk of that within the industry? I haven’t heard anything about it, nor is there any lively talk about it over at Close Protection World. I would also like to see this recruitment advertisement or maybe even a recruitment career page on their website, but there is nothing.
I do know that their website is registered in the UAE and supposedly they are based in Abu Dhabi. I do know that they made a promotional video for the company and concept, and you can watch that over at the gCaptain’s website here.
According to the article last year, they have brought on some interesting folks to run this navy. Here is the list.
The ribs will be manned by ex-Royal Marines, as will the group’s base in Abu Dhabi. Murray, a former French Foreign Legionnaire, will be Typhon’s chairman, with Lord Dannatt a non-executive. They will be joined by non-executives including General Sir Jack Deverell, former commander of Allied Forces Northern Europe; Admiral Harry Ulrich, ex-head of US naval forces in Europe; and Peter Ahlas, former chief of HSBC’s marine and insurance business. It’s quite a roll-call for a company that’s just completing its first fund-raising, of just $15m, and has yet to put to sea.
On a side note, Simon Murray has an interesting background. He did a stint in the French Foreign Legion. He is also a power broker and wealthy enough to make a project like this work. He is also partnered up with a non-military guy who I guess was the one that came up with the idea of Typhon. Here is the quote.
But Sharp himself is new to the all-action side of things. His career has seen him invest in start-up travel ventures from lastminute.com to GoAmerica, take AIM minnow Cashbox public, and launch Earthshine, a commodities distributor.
“I had the idea for Typhon playing polo one afternoon, thinking about what my next business might be,” says Sharp. “I picked on maritime security. Two years later we’re completing our funding round, acquiring our first vessel in weeks, and hope to be in theatre shortly after.”
It is always funny to me when you hear about the inception of an idea, like with Sharp’s statement of ‘while playing polo one afternoon, thinking about what my next business might be…’ lol Polo or golf, it seems like a lot of ideas for businesses get their start during play.
No mention of a Letter of Marque being issued either. Here is what was mentioned, and it would be cool to hear more about the legal side of this private navy.
The Britons intend to sail under a sovereign flag which will give them the legal right to carry their weaponry into harbour, rather than cache them on platforms in international waters.
Interesting stuff and I wish the company luck in their goal of firing up a private navy. –Matt
Glencore chief Simon Murray launches private navy to combat Somali pirate threat
By NICHOLAS HELLEN
January 06, 2013BRITAIN’S first private navy in almost two centuries is being created by a group of businessmen to take on the Somali pirates who are terrorising an expanse of the Indian Ocean.
Its armed vessels – including a 10,000-ton mother ship and high-speed armoured patrol boats – will be led by a former Royal Navy commodore. He is recruiting 240 former marines and other sailors for the force.
It will escort its first convoy of oil tankers, bulk carriers – and possibly an occasional yacht – along the east coast of Africa in late March or April.
Typhon, the company behind the venture, is chaired by Simon Murray, a millionaire businessman who joined the French Foreign Legion as a teenager and walked unsupported to the South Pole aged 63.
Typhon has been set up because the Royal Navy, NATO and the European Union Naval Force lack the vessels to patrol an area of ocean that is as large as North America, said Anthony Sharp, chief executive. “They can’t do the job because they haven’t got the budget and deploying a billion-pound warship against six guys [pirates] with $500 of kit is not a very good use of the asset,” he said.
Typhon said its aim is to deter pirates from attacking its convoys, rather than engaging in firefights.
The pirates will face former marines in armoured patrol boats capable of 40 knots and able to withstand incoming Kalashnikov fire. They will be armed with close-quarter battle weapons, such as the M4 carbine, and sniper rifles with a range of 2km.
The Britons intend to sail under a sovereign flag which will give them the legal right to carry their weaponry into harbour, rather than cache them on platforms in international waters.
Mr Murray is chairman of Glencore, one of the world’s largest commodities traders. He is backing the new force alongside other investors.
It will be funded by shipping firms in much the same way as the cargo ships sailing under Indian, Chinese and Russian flags hire private convoys.
Other Typhon directors include Admiral Henry Ulrich, former commander of US Naval Forces Europe, General Sir Jack Deverell, former commander in chief Allied Forces Northern Europe, and Lord Dannatt, former chief of the general staff.
Story here.————————————————————-
Typhon fights back against pirates
By Jonathan Sibun
15 Jan 2012The attack was launched against the ship at first light, just as the sun was rising off the Somali port of Mogadishu. Six heavily armed pirates opening fire with light calibre weapons before attempting to board the vessel.
They chose the wrong target. Tasked with escorting aid to Somalia, the ship was the ESPS Patino, the European Union naval force’s flagship in the Indian Ocean. The attack – launched last Thursday as the pirates mistook the Patino for a cargo ship – ended in failure with the injured Somalis taken into custody.
That skirmish might have ended in failure but it wasn’t an isolated incident. There were 176 such attacks in the Indian Ocean and Gulf of Aden in 2011, according to official figures. Some 25 of those ended in success for the pirates, bringing them $135m (£88m) from holding crews at gunpoint off the Somali coast and demanding eye-watering ransoms.
It’s a problem that has sparked debate in the House of Commons, criticism of the Government for failing to act tough, and prompted David Cameron to label Somalia a “failed state that directly threatens British interests”.
More pertinently for big business, it is thought to be hitting global trade to the tune of $12bn with shipping companies, commodity traders and insurers bearing the brunt of it.
But business is fighting back. Or if Anthony Sharp has his way, it will be. The British entrepreneur has teamed up with Simon Murray, the outspoken chairman of commodities giant Glencore, to launch Typhon.
As Sharp puts it in a promotional video: “The Typhon force will be the first of its kind for probably 200 years and will protect private shipowners’ assets at sea. Somali piracy has grown from entrepreneurial Somalis taking advantage of the closeness of shipping to their shores and their complete lack of coast guards to a fully fledged criminal activity.”
Typhon’s model is based on protecting ships in its care via what amounts to a private navy. Lord Dannatt, former Chief of the General Staff and one of a number of retired services personnel to join Typon, says: “What Typhon is setting out to do is corralling ships together in a confined area and escorting them properly – with a mothership, with armed guards in ribs patrolling around. The pirates are getting more confident. Unless decisive action is taken, the problem is going to get bigger, world trade is going to suffer, costs will rise and we’ll all be the losers. ”
The ribs will be manned by ex-Royal Marines, as will the group’s base in Abu Dhabi. Murray, a former French Foreign Legionnaire, will be Typhon’s chairman, with Lord Dannatt a non-executive. They will be joined by non-executives including General Sir Jack Deverell, former commander of Allied Forces Northern Europe; Admiral Harry Ulrich, ex-head of US naval forces in Europe; and Peter Ahlas, former chief of HSBC’s marine and insurance business. It’s quite a roll-call for a company that’s just completing its first fund-raising, of just $15m, and has yet to put to sea.
“Dannatt thought it was the right thing to do. Simon Murray felt the same – he’s a guy who doesn’t mind sticking his head above the parapet,” Sharp says, who claims also to have the financial backing of two Asian shipping companies.
But Sharp himself is new to the all-action side of things. His career has seen him invest in start-up travel ventures from lastminute.com to GoAmerica, take AIM minnow Cashbox public, and launch Earthshine, a commodities distributor.
“I had the idea for Typhon playing polo one afternoon, thinking about what my next business might be,” says Sharp. “I picked on maritime security. Two years later we’re completing our funding round, acquiring our first vessel in weeks, and hope to be in theatre shortly after.”
Protecting vessels against piracy is nothing new but so far security operators, such as Mast and even G4S, have done it primarily via vessel protection details. Ships buying protection pick up a security team from one port and drop it at another. “It’s not a great protection model,” says Sharp. “You’re taking the fight to the protected vessel and taking shots inbound. Our protection model is based on putting an exclusion zone around a convoy and protecting the zone, helped by unmanned aerial vehicles that at 10,000 feet can spot a potential threat miles away.” The model is build on prevention over aggression. “There are so many targets. It’s a bit like walking down a street where a house has a burglar alarm – why go for that house when there are all of the others?”
Sharp is planning to launch Typhon at Lloyds of London, honing in on Typhon’s biggest sales point – insurance. “A huge difference between our model and others is that we will negotiate reduced insurance rates. Rates have skyrocketed because it’s costing the industry $10bn-$12bn a year when you add everything up. Ransoms alone are $800m-$1.2bn.”
South Korea reportedly paid $25m to reclaim a ship last year. “And then that’s the new bar. It throws out Lloyds’ actuarial valuations,” says Sharp. “You have no idea what to charge as a premium. For my clients, we can take out some of the risk. I’ve got a letter from a Lloyds broker saying we can offer a 50pc discount on rates. That more than caters for our services.”
A letter is of course just a letter and Typhon’s plans have yet to get off the ground, quite literally, but insurance insiders welcome the idea. “Rates are expensive because the claims are significant. Anything that can be done to reduce risk will cut that cost,” says one senior broker. “The insurers have faced criticism for paying out on ransoms but we’re trying to act pragmatically. We recognise though that this is not a solution to the problem.”
Sharp also believes that the support of companies like Glencore, one of the world’s biggest commodity traders, will be crucial. That’s where Murray comes in. “When you get your ship taken, you don’t want your cargo held up because prices change. So companies are insisting ship owners take security,” Sharp says. “Simon will come in very useful. He’s already introduced me to guys at Glencore.”
The difficulty for the insurers, shippers and commodity players is that so far there is no other solution. If Typhon can make its model work – and sourcing vessels, aircraft and Marines will be expensive – there’s a market.
The pirates themselves show no signs of drifting away – it’s too good a source of income for people living well below the breadline, and for their backers. Piracy in Somalia is seen as a business in itself. While the pirates are often unskilled, uneducated young men from rural communities, their backers are in some cases anything but. The pirates have developed an investment base allowing businessmen, both domestic and foreign, to finance their operations.
“The guys started off with their own PR being around poor fisherman having waste dumped in their waters. But sympathy disappears when you start killing people and extorting companies,” says Sharp. “There are 38 piracy training camps run by rogue special forces. It’s financed by people buying shares in their teams. So if you fund their boat, you get a share in the ransom.” Sharp believes the proceeds are fuelling micro property bubbles in places as far afield as Nairobi.
“Ultimately that’s being paid for by Lloyds and the insurance market,” he adds.
Should the business take off, Sharp hopes to have 10 vessels on the water within 24 months. Not long after that he plans to be onto his next venture. “We’ll build this business over three years and sell it to someone like G4S or a US equivalent,” he says.
There’s a lot of water to flow through the Gulf before then.
Story here.