Adani Ports and Special Economic Zone Ltd (APSEZ) on Wednesday announced acquisition of 49.38 per cent equity stake in third party liquid tank storage player Indian Oil tanking Ltd (IOTL) for ₹1,050 crore.
APSEZ said it has signed a definitive agreement with Oiltanking India GmbH and Oiltanking GmbH for the acquisition of 49.38 per cent in IOTL and also additional 10 per cent equity stake in IOT Utkal Energy Services Ltd, a subsidiary of IOTL. Oiltanking India GmbH is a wholly-owned subsidiary of Oiltanking GmbH.
The all-cash deal makes APSEZ India’s largest third-party liquid tank storage player.
“With this acquisition, APSEZ’s oil storage capacity jumps 200 per cent to 3.6 million 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.
Expanding footprint
“The Investment is in line with company’s strategy to increase its footprint as a transport utility and augment liquid storage assets in India,” APSEZ said in a regulatory filing. The transaction is expected to be completed within approximately two months.
APSEZ also informed that IOTL, over the past 26 years, has built a network of six terminals 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) for storage of crude and finished petroleum products.
The owned facilities include Navghar terminal in Maharashtra, Raipur terminal in Chhattisgarh and Goa terminal. The BOOT terminal with Indian Oil Corporation Ltd (IOCL) is at Paradip (Odisha) and O&M contracts with IOCL are at JNPT (Maharashtra) and Dumad (Gujarat). The company also has a biogas plant of 15 TPD capacity in Namakkal (Tamil Nadu).
“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,” Adani said
The company recently signed a 25-year BOOT contract with Numaligarh Refinery Ltd for construction, operation, and maintenance of 0.6 million KL crude storage tanks at the Paradip Port. Besides, the company is also negotiating/bidding on various other large projects, both at existing facilities and new locations.
The majority of IOTL’s tank capacity is contracted by PSUs and oil majors. With around 80 per cent of IOTL’s capacity under ‘Take-or-Pay’ contract, there is a good visibility on the future cash flows of the company, it said.
In fiscal 2022, IOTL’s revenue and EBITDA were ₹526 crore and ₹357 crore respectively. The acquisition price of ₹1,050 crore implies an EV/EBITDA multiple of around 8 times on the fiscal 2022 numbers. Ernst & Young acted as the exclusive M&A Advisor to Oil tanking as the sell-side advisor.
