- Ocean Sparkle Ltd (OSL) ranks 1st in India and 11th globally in providing end-to-end marine services
- Acquisition through TAHSL provides APSEZ a platform for global expansion, in line with APSEZ’s aspirations to become the largest port operator globally by 2030
- OSL’s business model provides for long-term cash visibility on the back of take-or-pay contracts with average contract life of 7+ years with sovereign equivalent customers
- Transaction closed at EV/FY23 EBITDA multiple of 5.7x which is value accretive from day one
Adani Ports and Special Economic Zone Ltd (APSEZ) through its subsidiary, The Adani Harbour Services Ltd (TAHSL), has entered into a definitive agreement for the acquisition of 100% stake in Ocean Sparkle Ltd (‘OSL’), India’s leading third-party marine services provider.
Key activities carried by the company include towage, pilotage, and dredging. With an asset base of 94 owned vessels and 13 third-party owned vessels, OSL is a market leader. OSL is valued at an enterprise value of INR 1,700 Cr with INR 300 Cr of free cash in the company. The company was established in 1995 by a group of marine technocrats with Mr. P Jairaj Kumar as the Chairman and MD, who 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 Mr 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 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,”
OSL has long-standing relationships with its existing clients, with contracts ranging from 5 to 20 years (average length of contracts is ~7 years). Further, the contracts are on Take or Pay (TOPA) basis, thereby providing robustness to OSL’s business model. The Company has presence in all the major ports, 15 minor ports and all the 3 LNG terminals in India.
Over the years, OSL has built and deployed a team of 1,800 personnel across India. The Company has significant experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa.
Financials and Valuation
OSL’s attractive capital structure, quality operations and sustainable cash flows are reflected in its attractive credit rating (AA- by ICRA). The Company is expected to have revenue of INR ~600 Cr, EBITDA of INR ~310 Cr and PAT of INR ~135 Cr in FY22. Around 92% of OSL’s total revenue was contributed by marine services (Towage & Pilotage), and the remaining 8% is from dredging and other offshore services combined. The net debt to EBITDA ratio is less than 1x. APSEZ’s acquisition of OSL concluded at an attractive EV/ FY23E EBITDA of 5.7x.
On the back of operational and financial synergies, the consolidated revenue and EBITDA of Adani Harbour Services is expected to jump ~100% and reach around INR 5,000 Cr & INR 4,000 Cr respectively by FY27.