Adani Ports and Special Economic Zone Ltd (APSEZ), through its subsidiary The Adani Harbour Services Ltd, has entered into a definitive agreement to acquire a 100 per cent stake in Ocean Sparkle Limited (OSL), India’s largest third-party marine services provider, for a consideration of Rs 1,530 crore.

The company, led by Indian billionaire Gautam Adani, will pay Rs 1,135.3 crore for a direct 75.69% stake in OSL and Rs 394.87 crore for an indirect 24.31 per cent stake, the company said in a stock exchange filing on April 22. The transaction is expected to close within a month.

“OSL has an enterprise value of Rs 1,700, and the company has free cash of Rs 300. The company was established in 1995 by a group of marine technologists with Mr. P Jairaj Kumar as Chairman and General Manager, who will continue to serve as OSL Chairman of the Board,” said Ada Nigerian group companies said in the document.
OSL has an asset base of 94 owned vessels and 13 third-party-owned vessels.

The company’s main activities include towing, pilotage, and dredging. “OSL has a long-standing relationship with its existing customers, with contract terms ranging from 5 to 20 years (average contract term is around seven years). Receiving stations have operations in Yemen and Africa.

“Given the synergies between OSL and Adani Harbour Services, the combined business could double within five years while improving profit margins, creating significant value for APSEZ shareholders.” Mr. Karan Adani, CEO and full-time director of APSEZ Say.

“This acquisition provides APSEZ with a significant share of the Indian marine services market and provides us with a platform to build our business in other countries, thereby enabling APSEZ to become the world’s largest port operator and India’s largest integrated transport utility by 2030 business company.”

ICRA assigns OSL an AA-credit rating. Instruments with this rating are considered to have a high degree of safety in meeting their financial obligations promptly. The credit risk of such instruments is very low. “The company is expected to generate revenue of around Rs 600, EBITDA of around Rs 310, and PAT of around Rs 135 in FY22. Around 92 per cent of OSL’s total revenue is derived from marine services (towing and pilotage), and the remaining 8 per cent is derived from dredging and other Offshore services. Net debt to EBITDA is less than 1x, according to ICRA.