Adani Group acquires 100% stake in Ocean Sparkle

Adani Ports and Special Economic Zones (APSEZ) on Friday said its subsidiary Adani Harbour Services has entered into a definitive agreement to acquire a 100% stake in third-party marine services provider Ocean Sparkle Ltd (OSL) .

The Gautam Adani-led conglomerate will pay ₹1,135.30 crore for direct acquisition of 75.69% stake in the marine company, along with ₹394.87 crore for indirect purchase of 24.31% stake, according to a stock exchange filing.

Ocean Sparkle, which has an asset base of 94 owned vessels and 13 third-party owned vessels, is valued at an enterprise value of ₹1,700 crore, with ₹300 crore of free cash in the company, the filing says.

The company was established in 1995 by a group of marine technocrats with P. Jairaj Kumar as the chairman and managing director, who will continue as the chairman of the Ocean Sparkle board.

Given the synergies of Ocean Sparkle 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 Karan Adani, chief executive officer and whole-time director at Adani Ports and Special Economic Zones.

"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," Adani said.

According to ICRA, Ocean Sparkle is expected to have revenue of around ₹600 crore, operating income of around ₹310 crore and profit after tax of around ₹135 crore in FY22.

"Around 92% of OSL’s total revenue was contributed by marine services (towage and pilotage), and the remaining 8% is from dredging and other offshore services combined. The net debt to EBITDA ratio is less than 1x," ICRA says.

Ocean Sparkle has long-standing relationships with its existing clients, with contracts ranging from five to 20 years (average length of contracts is around 7 years), the filing says. "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. It also has experience in global maritime servicing through its operations in Oman, Saudi Arabia, Sri Lanka, Qatar, Yemen and Africa.

Ocean Sparkle employs 1,800 people across India. Key activities carried by the firm include towage, pilotage, and dredging.