Adani Ports and Special Economic Zone Ltd (APSEZ) through its subsidiary, The Adani Harbour Services Ltd (TAHSL), has entered into a definitive agreement for acquisition of 100% 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 Rs. 1700 Cr with Rs. 300 Cr 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 Managing Director, 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 – 20 years (average length of contracts is approximately seven 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 three LNG terminals in India.
Over the years, OSL has built and deployed a team of 1800 personnel across India. The company has 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 Rs. 600 Cr, EBITDA of Rs. 310 Cr and PAT of Rs.135 Cr in FY22. Around 92% of OSL’s total revenue was contributed by marine services (towage and pilotage), and the remaining 8% is from dredging and other offshore services combined. The net debt to EBITDA ratio is less than 1 x. APSEZ’s acquisition of OSL concluded at an attractive EV/ FY23E EBITDA of 5.7 x.
On the back of operational and financial synergies, the consolidated revenue and EBITDA of Adani Harbour Services is expected to jump ~100% and reach around Rs. 5000 Cr and Rs. 4000 Cr respectively by FY27.
Read the article online at: https://www.drybulkmagazine.com/ports-terminals/26042022/adani-acquires-ocean-sparkle/
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