Hope floats

A group of private equity insiders is bringing – at last – an inter-island ferry service to Hawaii.

When Timothy Dick arrived in Hawaii in 2001, he quickly realised something over which residents of the American state have long puzzled: the eight-island archipelago has no ocean ferry service. A perplexing fact of Hawaiian life is that, for example, a person in Honolulu who wishes to go to Kapalua, Maui, must take a 30 minute plane flight.

When he learned that the last attempt at launching a Hawaii ferry service had failed in the 1970s, Dick, who built a fortune that culminated in a $900 million (€761 million) sale of his directory business, WorldPages.com, to a Thomas H. Lee Partners-led consortium, found his next entrepreneurial itch to scratch.

In November, the long-hoped-for inter-island service sped closer to reality with the announcement that private equity firms Norwest Equity Partners and JF Lehman will invest $80 million in equity in Dick’s Hawaii Superferry venture. The investment will allow the company to purchase two high-speed, 107-meter “semi-SWATH” catamarans built by Austal Ships, which cost roughly $60 million each.

The ships will allow a maximum of 900 travelers to store as many as 250 cars below while luxuriating upstairs at a restaurant, full bar and video-game arcade. A trip to Maui from Honolulu is expected to take three hours. The company estimates that a crossing will cost a family of five far less than what they would pay for individual airplane tickets and a car rental on a second island. What’s more, locals and tourists alike will finally be able to arrive at other islands the way travelers throughout most of Hawaiian history – by sea.

On the company’s board are two private equity insiders. John Dean was chief executive officer of Silicon Valley Bank, the dominant provider of venture debt to the US private equity market, and among the most super-connected people in Silicon Valley. Another director, John Lehman, is the founder of JF Lehman, based in New York. Lehman knows his way around a ship – from 1981 to 1987 he was secretary of the US Navy.

Hawaii Superferry service is scheduled to begin in 2007. The first ship will run daily from Honolulu to Maui and Kauai. A second ship is scheduled to run two round trips per day to Maui and one round trip per day to Kauai and the Big Island.