Mark Spehn will not be able to attend billionaire Idan Ofer's party at Beachfront Villas north of Tel Aviv on June 8 to celebrate Zim Integrated Shipping Services Ltd. 's (IPO). But it doesn't matter. The 35-year-old Deutsche Bank trader has a lot to celebrate in his London office.
Since Deutsche Bank made a fortune betting against US subprime mortgage securities more than a decade ago, Spehn's long-term bet on the once troubled Israeli shipping company is expected to bring the bank a return of one or two. The world's 11th largest container shipping company is now catching up with high freight rates, and Deutsche Bank's potential windfall could rise to nearly $1 billion.
Zim Integrated Shipping Services Ltd. container ship.
Spehn, a distressed debt trader, has been betting less than $100m on Zim bonds and bank loans at hefty discounts since 2016. He also bought a multimillion-dollar stake in the company during the freight downturn. Today, these investments have soared, bringing Deutsche Bank a gain equivalent to about 1/4 of the investment bank's profits in 2020.
Deutsche Bank and Spehn declined to comment on the deal.
Soon after Spehn joined Deutsche Bank, he began to build positions in Zim. Zim helped Jewish immigrants move to their new homes after World War II. The restructuring, which got out of debt trouble in 2014, reduced debt while diluting the controlling shareholder, Israeli tycoon Ofer, but struggled to cheer up because of low shipping costs.
Idan OferSpehn didn't back down. With the consolidation of the industry, the support of Ofer and the efforts of the company's management in digitizing and building alliances, he made Zim a top priority. The trader ran around to persuade others to bet with him, but it was hard to be recognised at the time because global interest rates were still low, according to people familiar with the matter.