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Adani Ports and Special Economic Zone Ltd (APSEZ) on Friday announced the acquisition of third-party marine services provider Ocean Sparkle Ltd (OSL) for an enterprise value of ₹1,700 crore. APSEZ, through its subsidiary, The Adani Harbour Services Ltd (TAHSL), has entered into a definitive agreement to acquire a 100 per cent stake in OSL.
APSEZ shares gained one per cent to trade at ₹858.45 on BSE at the opening trades on Friday after the announcement. The acquisition through TAHSL provides APSEZ with a platform for global expansion, in line with APSEZ’s aim to become the largest port operator globally by 2030.
OSL, the market leader in the segment in India, is valued at an enterprise value of ₹1,700 crore with ₹300 crore of free cash in the company, APSEZ said in a statement. APSEZ sees the acquisition value as accretive, as the transaction is done at the enterprise value fiscal 2023 EBITDA multiple of 5.7x.
OSL's key activities include towage, pilotage, and dredging with an asset base of 94 owned vessels and 13 third-party-owned vessels. OSL has a presence in all the major ports, 15 minor ports, and 3 LNG terminals in India.
Long-term cash visibility
Established in 1995 by a group of marine technocrats, OSL’s business model provides long-term cash visibility on the back of take-or-pay contracts with average contract life of 7+ years with sovereign equivalent customers, thereby underlining sustained business and cash generation for the acquiring company. The company's existing Chairman and MD, P Jairaj Kumar 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 a 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," he said.
OSL India team
OSL has deployed a team of 1,800 personnel across India while it has a significant experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa. Rated as AA by ICRA, OSL has an attractive capital structure, quality operations and sustainable cash flows, APSEZ stated.
In a statement, APSEZ informed that OSL is expected to have revenue of around ₹600 crore, EBITDA of about ₹310 crore and PAT of approximately ₹135 crore in fiscal 2021-22.
"Around 92 per cent of OSL’s total revenue was contributed by marine services (towage and 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," the APSEZ statement said.
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