Adani Ports acquires 49.38% stake in Indian Oiltanking; share down 1%

Shares of Adani Ports and Special Economic Zone Ltd (APSEZ) dropped over 1% in early trade on Thursday, in sync with the broader market, a day after the Adani Group company acquired a 49.38% equity stake in Indian Oiltanking Ltd (IOTL), a developer and operator of liquid storage facilities, for ₹1,050 crore. The acquisition is well aligned with APSEZ’s strategy of becoming the largest transport utility in the country, the company said in a release.   

The logistic arm of Adani Group in an exchange filing on Wednesday said it will acquire Oiltanking India GmbH’s 49.38% equity stake in IOTL and an additional 10% stake in one of its subsidiaries (IOT Utkal). With this, APSEZ has become India’s largest third-party liquid tank storage player, it said.

Oiltanking GmbH is a subsidiary of Marquard & Bahls, an independent holding company in the energy and chemical sector. Through its portfolio, Oiltanking is one of the largest independent tank storage providers for gas, chemicals, and petroleum products worldwide.

In a post market release, billionaire Gautam Adani-led APSEZ said, “The company has entered into a definitive agreement for the acquisition of Oiltanking India GmbH’s 49.38% equity stake in Indian Oiltanking Ltd (IOTL), which is one of India’s largest developer and operator of liquid storage facilities.”

As per the release, the agreement includes acquisition of an additional 10% equity stake in IOT Utkal Energy Services, a 71.57% subsidiary of IOTL.

“With this acquisition, APSEZ’s oil storage capacity jumps 200% to 3.6 Mn KL, making it India’s largest third-party liquid storage company. This ties well with our ambition to become the largest transport utility globally,” said Karan Adani, CEO and Whole Time Director of APSEZ.

“This stake purchase is also well aligned with our strategy of diversifying the cargo mix with focus on products and services having higher realisation and margins. The deal will further strengthen our strategic partnership with IOCL, a key stakeholder and India’s largest refiner and customer of oil storage tanks,” he added.a

APSEZ said that IOTL is on a growth spree given the increasing demand for oil products in the country. The company recently signed a 25-year BOOT contract with Numaligarh Refinery Ltd for the construction, operation, and maintenance of 0.6 Mn KL crude storage tanks at the Paradip Port. Besides, the company is also negotiating on various other large projects, both at existing facilities and new locations.

“The majority of IOTL’s tank capacity is contracted by reputed PSUs and oil majors. With around 80% of IOTL’s capacity under ‘Take-or-Pay’ contract, there is a good visibility on the future cash flows of the company,” it said.

On Thursday, Adani Ports and Special Economic Zone shares opened marginally lower at ₹890.05, against the previous closing price of ₹891.20 on the BSE. In the first hour of the trade so far, the stock dropped more than 1% to ₹881. The market capitalisation stood at ₹1.86 lakh crore with 1.48 lakh shares changing hands over the counter on the BSE against the two-week average volume of 5.44 lakh stocks. In comparison, the BSE benchmark Sensex was down 433 points, or 0.7%, at 60,600 levels.