KG financing

KG financing is the German Kommanditgesellschaft model that funded a large share of the global containership fleet in the 1990s and 2000s. A limited partnership owned a single ship, with a general partner managing it and many retail limited partners supplying equity attracted by tax deferral and tonnage-tax treatment, while a bank provided senior debt. Issuing houses in Hamburg marketed the units to German private investors. The structure collapsed after 2008 when charter rates and asset values fell, distributions stopped, and refinancing dried up, leaving widespread defaults. It shaped the German banks’ large shipping loan books and their later distress.