Adani Group acquires India’s largest marine service company, Ocean Sparkle, intending to be the world’s largest port operator.
On Friday, Adani Ports and Special Economic Zone Limited (APSEZ) announced the acquisition of Ocean Sparkle, a third-party marine service provider, for an enterprise valuation of Rs.1700 crores.
The Adani Harbor Service Limited (TASHL) has entered into a definitive agreement and acquired a 100% stake in Ocean Sparkle.
Adani group will acquire OSL for consideration of Rs.1530 crores. Adani group will pay Rs 1135.30 crores for the direct acquisition of 75.69 per cent stake in OSL, and along with it Rs.394.87 crore for the indirect acquisition of 24.31 per cent stake, as stated by the company in a stock exchange filing on April 22. This transaction is expected to be completed within a month.
About Ocean Sparkle Limited (OSL).
Ocean Sparkle Limited was established in 1995 by a group of marine technocrats with P Jairaj Kumar as the chairman and managing director. Ocean Sparkle, which provides end-to-end marine services, ranks first in India and eleventh globally. With its overall essential ports, the company has 15 minor ports and three LNG terminals in India. The company has an asset base of 94 owned vessels and 13 third-party-owned vessels. Key activities carried on by OSL are towage, piloting, and dredging.
Reasons behind Adani Group going for this acquisition.
OSL, on its company’s website, posted a video in which the company said, “We give our clients a single point of accountability through seamless integration of all services ineffective execution of marine operations”. OSL has an enterprise value of Rs.1700 crores with Rs.300 crore of free cash. OSL has, over the years, built and deployed a team of 1800 personnel across India.
Ocean Sparkle has experience in global maritime servicing through its operation in places like Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen, and Africa.
OSL has built a strong relationship with its existing clients, with contracts ranging from 5 to 20 years. The contracts in OSL are based on a Take or Pay basis, which helps provide an effective business model.
ICRA, a credit rating agency, has given Ocean Sparkle Limited AA- Credit rating because of its attractive capital structure, quality operations, and sustainable cash flows. ICRA also said, “The company is expected to have revenue of Rs.600 crore, EBITDA of Rs.310 crore, and profit after tax of Rs. 135 crores in FY22. Around 92 percent of total revenue was contributed by marine services (Towage and Pilotage) and the remaining 8 percent came from dredging and other offshore services combined”.
Karan Adani, the CEO and whole-time director of Adani Ports and Special Zone Ltd. (APSEZ), said in a statement, “Given the synergies of OSL and Adani Harbor Services, the consolidated business is likely to double in five years with improved margins, thereby creating significant value for APSEZ’s shareholders.”
Adani also further stated, “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 the year 2030 and the largest integrated transport utility in India”.
Edited by Prakriti Arora