Adani acquires 100 per cent stake in India’s largest marine services firm

Adani Ports and Special Economic Zone (APSEZ) through its subsidiary, The Adani Harbour Services Ltd (TAHSL), has entered into a definitive agreement for acquisition of 100 per cent stake in Ocean Sparkle Ltd (OSL), India’s leading third-party marine services provider.

Key activities carried by the company include towage, pilotage, and dredging.

With an asset base of 94 owned vessels and 13 third-party owned vessels, OSL is a market leader. OSL is valued at an enterprise value of Rs1,700 crore with Rs 300 crore of free cash in the company. The company was established in 1995 by a group of marine technocrats with P. Jairaj Kumar as the Chairman and MD, who will continue as the Chairman of the OSL board.

“Given the synergies of OSL and Adani Harbour Services, the consolidated business is likely to double in five years with improved margins, thereby creating significant value for APSEZ’s shareholders,” said Karan Adani, CEO and Whole-time Director, APSEZ. “This acquisition not only provides APSEZ a significant share of India’s marine services market but also provides us a platform for building presence in other countries, thereby facilitating APSEZ’s journey towards becoming the largest port operator globally by 2030 and largest integrated transport utility in India.”

OSL has long-standing relationships with its existing clients, with contracts ranging from 5 to 20 years (average length of contracts is 7 years). Further, the contracts are on Take or Pay (TOPA) basis, thereby providing robustness to OSL’s business model. The Company has presence in all the major ports, 15 minor ports and all the 3 LNG terminals in India.

Over the years, OSL has built and deployed a team of 1,800 personnel across India. The Company has significant experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa.

OSL’s attractive capital structure, quality operations and sustainable cash flows are reflected in its attractive credit rating (AA- by ICRA). The Company is expected to have revenue of Rs600 crore, EBITDA of Rs310 crore and PAT of Rs 135 crore in FY22. Around 92 per cent of OSL’s total revenue was contributed by marine services (Towage & Pilotage), and the remaining 8 per cent is from dredging and other offshore services combined. The net debt to EBITDA ratio is less than 1x. APSEZ’s acquisition of OSL concluded at an attractive EV/ FY23E EBITDA of 5.7x.

On the back of operational and financial synergies, the consolidated revenue and EBITDA of Adani Harbour Services is expected to jump 100 per cent and reach around Rs 5,000 crore and Rs 4,000 crore respectively by FY27.

Meanwhile Adani Enterprises shares up nearly 5 per cent, Co commits Rs10k crore investment in Bengal.

Shares of Adani Group company Adani Enterprises rose nearly 5 per cent, a day after the group chairman and founder, Gautam Adani, proposed to invest Rs10,000 crore in West Bengal in next few years.

“This investment will be mainly in sectors like under-sea cables, data centres and warehouses,” he said at the summit.

On Thursday, the shares of the Adani company settled at Rs2,290, up 4.9 per cent from the previous close.

Since the start of 2022, the company’s shares rose 33 per cent.

Last week the Abu Dhabi’s International Holding Company (IHC) said it will invest $2 billion as primary capital in three Adani portfolio companies – Adani Green Energy Ltd (AGEL), Adani Transmission Ltd (ATL) and Adani Enterprises Ltd (AEL), the Indian conglomerate said.

IHC will invest Rs3,850 crore in AGEL, Rs3,850 crore in ATL and Rs7,700 crore in AEL. The transaction is expected to be completed in a month, after all necessary approvals are obtained.

The investment will happen through the preferential allotment route. The capital will be utilised for pursuing the growth of the respective businesses, further strengthening of the balance sheet and for general corporate purposes.

International Holding Company PJSC engages in investing, trading, processing, and packing seafood products in the Middle East, Europe, and the Americas. It operates through utilities, real estate, digital, industrial, food, and capital segments.

The boards of AGEL, ATL and AEL approved the transaction. The investment is subject to shareholder and regulatory approvals and shall comply with SEBI regulations. The three Adani companies – AGEL, ATL and AEL – span the Adani Group’s green portfolio.

“This will be a long-term investment in India as the country is driving much innovation globally, including the green energy sector. The opportunity to earn a compelling return on investment in green energy has never been greater. We are confident that Adani companies will play a significant role in unleashing India’s total green energy potential, reflecting positively on our shareholders’ commitment,” said Syed Basar Shueb, CEO and Managing Director of IHC.