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Seven Islands Shipping Ltd (SISL) is weighing a potential entry into gas carriers and container ship segments, buoyed by the surge in freight rates.
SISL is India’s second biggest private oil tanker shipping company backed by Indian born Canadian businessman Prem Watsa-led Fairfax.
“Until now, SISL had only owned and operated tankers that transported liquid cargo. But, based on the current ship prices and charter rates, it sees potential for better growth from gas carrier and containers. They are in the process of assessing this opportunity in greater detail,” Prem Watsa, Chairman, Fairfax India Holdings Corporation, told shareholders in a March 5 letter.
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.
Container and LPG shipping have seen strong performance in recent months. India’s presence in LPG shipping is led by Shipping Corporation of India, Great Eastern Shipping Co and Global United Shipping Company.
In the case of containers, Shipping Corporation and Shreyas Shipping & Logistics have a limited presence in the segment.
IPO plan
In February, SISL said it had filed draft prospectus with SEBI to sell shares in an IPO to raise as much as ₹600 crores to fund a fleet expansion plan.
The planned share sale comprises a fund raise 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 super tanker and one medium range tanker from the secondary market with an investment of ₹352.43 crore.
SISL owns 20 vessels comprising crude oil and petroleum product carriers with a combined capacity of about 1.1 million metric tons (MMT). All SISL’s vessels are registered in India and operate as Indian-owned and flagged vessels.
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 on spot contracts.
During Fiscal 2018, 2019, 2020 and nine months ended December 31, 2020, the company generated 94.9%, 98.2%, 88.9%, and 85.2% respectively of its revenue from contracts with oil PSUs.
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