Adani Ports and Special Economic Zone Ltd (APSEZ) through its subsidiary, The Adani Harbour Services Ltd (TAHSL), has entered into an agreement for acquisition of 100% stake in Ocean Sparkle Ltd (OSL), for a consideration of Rs 1,530 crore ($200 million).
OSL, India’s leading third party marine services provider, faciliates key activities such as towage, pilotage and dredging.
APSEZ, led by Indian billionaire Gautam Adani, will pay Rs 1,135.30 crore ($148.5 million) for direct acquisition of 75.69% stake in OSL, along with Rs 394.87 crore ($51.6 million) for indirect acquisition of 24.31% stake, the company said in a stock exchange filing on Friday.
Moelis & Company was the financial advisor to Adani Harbour Services for the deal.
The transaction is expected to be completed within one month.
With an asset base of 94 owned vessels and 13 third-party owned vessels, OSL is valued at an enterprise value of Rs 1,700 crore with Rs 300 crore of free cash in the company. The company was established in 1995 by a group of marine technocrats with Mr. P Jairaj Kumar as the Chairman and MD, who will continue as the Chairman of the OSL board, Adani Group company said in the filing.
“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.
He added, “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 three 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.
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 5,000 crore and Rs 4,000 crore respectively by FY27, the filing further said.
APSEZ, part of the Adani Group, is the largest port developer and operator in India with six strategically located ports and terminals on the west coast (Mundra, Dahej, Tuna and Hazira in Gujarat, Mormugao in Goa and Dighi in Maharashtra) and six ports and terminals on the East coast of India (Dhamra in Odisha, Gangavaram, Visakhapatnam and Krishnapatnam in Andhra Pradesh, and Kattupalli and Ennore in Chennai) representing 24% of the country's total port capacity.