Sunday, December 4, 2022

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Adani Ports buys 49.38% stake in Oiltanking for Rs 1,050 cr

New Delhi: One of India’s major developers and operators of liquid storage facilities, Adani Ports and Special Economic Zone Ltd (APSEZ) has entered into a binding agreement to buy Oiltanking India GmbH’s 49.38 percent equity ownership in Indian Oiltanking Ltd (IOTL).

Adani Ports would also purchase a further 10% ownership investment in IOT Utkal Energy Services Ltd, a 71.57 percent subsidiary of IOTL, as part of the arrangement.

According to a press statement from Adani Ports and Special Economic Zone (APSEZ), this makes it the largest third-party liquid tank storage company in India.

“With this acquisition, APSEZ’s oil storage capacity jumps 200 percent 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 Mr 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 a 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.”

Given the nation’s rising need for oil products, IOTL is seeing rapid expansion. Recently, the business and Numaligarh Refinery Ltd. signed a BOOT agreement for 25 years that will see the company build, run, and maintain 0.6 million KL of crude storage tanks at the Paradip Port. Additionally, the business is negotiating with and/or submitting bids for numerous other significant projects, both at current facilities and new sites.

Leading PSUs and oil majors have contracted for the majority of IOTL’s tank capacity. With over 80% of IOTL’s capacity covered by the “Take-or-Pay” contract, the company’s upcoming cash flows are well understood. Revenue and EBITDA for IOTL in FY22 were Rs 526 crore and Rs 357 crore, respectively. An EV/EBITDA multiple of 8x on FY22 data is implied by the acquisition price of Rs 1,050 Cr.

For the storage of crude and finished petroleum products, IOTL has developed a network of six terminals spread across five states with a total capacity of 2.4 million KL (owned capacity of 0.5 million KL and BOOT capacity of 1.9 million KL). The owned facilities consist of the Goa port, the Raipur terminal in Chhattisgarh, and the Navghar terminal in Maharashtra.

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