Fairfax-backed Seven Islands Shipping expands LPG fleet with medium size carrier

P Manoj Mumbai | Updated on September 27, 2021

Purchase the 2003-built medium gas carrier from MOL Tankship Management and registers it under the Indian flag as ‘Rose Gas’.

Seven Islands Shipping Ltd (SISL) has acquired a medium gas carrier (MGC), its second liquefied petroleum gas (LPG) tanker this month, after venturing into the gas transportation business to tap the growing demand for LPG imports into India.

Seven Islands Shipping, backed by Indian born Canadian businessman Prem Watsa-led Fairfax India, purchased the 2003-built medium gas carrier from MOL Tankship Management Pte Ltd, registered it under the Indian flag as ‘Rose Gas’ and chartered it to Bharat Petroleum Corporation Ltd (BPCL) for two years, multiple sources said.

Earlier this month, India’s second-biggest private oil tanker shipping company acquired a very large gas carrier for about $43 million.

The 2006-built very large gas carrier was purchased from New York Stock Exchange-listed Dorian LPG Ltd, one of the world’s top owners and operators of VLGCs.

The VLGC ‘Captain Markos NL’ has been re-named ‘Pine Gas’ and registered under the Indian flag. The ship has been chartered by Indian Oil Corporation Ltd (IOC) for two years.

Seven Islands Shipping spent some $63 million on the two ships, an executive with a ship broking firm said.

Rates for shipping LPG has been performing well despite the overall slump in the tanker market.

A very large gas carrier currently fetches $33,000-34,000 a day for its owner on a charter period ranging from 1-3 years, while a medium gas carrier earns $22,000-23,000 a day for the same tenure.

India has overtaken Japan to become the second-largest importer of LNG in the world. At any given time, Indian oil marketing firms require 20-22 very large gas carriers (VLGC) and 10-12 medium gas carriers (MGC) to haul LPG into the country.

There is a business for 30-34 LPG carriers because of the huge demand for cooking gas driven by the ‘Ujjwala Yojana’ that seeks to provide LPG access to 80 million households Below Poverty Line (BPL).

“Indian tonnage in energy shipping is poised to grow steadily in the coming years,” the shipbroking executive mentioned earlier said.

Seven Islands earn a big portion of its total revenue from three PSU oil firms – IOC, BPCL and HPCL, with whom its ships are deployed on time charter and spot contracts.

The gas transportation contracts are expected to boost the firm’s valuation ahead of a share sale.

IPO plan

In February, SISL said it filed a draft prospectus with SEBI to sell shares in an initial public offering to raise as much as ₹600 crore to fund a fleet expansion plan.

The planned share sale comprises fundraise via fresh issue amounting to ₹400 crore and an offer for sale of up to ₹100 crore by FIH Mauritius Investments (a unit of Fairfax India) and ₹99.99 crore by promoters Thomas Wilfred Pinto and Leena Metylda Pinto.

The net proceeds raised from the fresh issue will be utilised to acquire one very large crude carrier or oil supertanker and one medium-range tanker from the secondary market with an investment of ₹352.43 crore, it said at the time.

In March 2019, Fairfax India acquired a 41.4 per cent stake in SISL for $71.8 million through a direct subscription of $28.9 million and a secondary acquisition from existing shareholders of $42.9 million. In September and October 2019, Fairfax India acquired an additional 7.1 per cent from existing shareholders for $12.1 million, taking its total stake in SISL to 48.5 per cent.

Published on September 27, 2021

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