Adani Ports acquires 49.38% stake in Indian Oiltanking Ltd for Rs 1,050 crore

Ahmedabad, November 9, 2022

Adani Ports and Special Economic Zone Ltd (APSEZ), the largest transport utility in India, today said it had 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 developers and operators of liquid storage facilities.

The agreement also includes acquisition of an additional 10% equity stake in IOT Utkal Energy Services Ltd, a 71.57% subsidiary of IOTL, a press release from the company, a part of the Adani Group, said.

Indian Oiltanking Limited was formed in 1996 as a 50:50 joint-venture between Indian Oil Corporation Limited (IOC) and Oiltanking GmbH, Germany to provide storage and logistics solutions for crude oil and petroleum products.

Over the last 26 years, IOTL has built a network of six terminals across five states with a total capacity of 2.4 million kilolitres (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).

“With this acquisition, APSEZ’s oil storage capacity jumps 200% 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.

“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 said.

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 million KL crude storage tanks at the Paradip Port.

Besides, the company is also negotiating and bidding 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. In FY22, IOTL’s revenue and EBITDA were Rs 526 crore and Rs 357 crore, respectively.

The acquisition price of Rs 1,050 crore implies an EV/EBITDA multiple of ~8x on FY22 numbers, the release said.

APSEZ is the largest port developer and operator in India with 6 strategically located ports and terminals on the west coast (Mundra, Dahej, Tuna and Hazira in Gujarat, Mormugao in Goa and Dighi in Maharashtra) and 6 ports and terminals on the East coast of India (Dhamra in Odisha, Gangavaram, Visakhapatnam and Krishnapatnam in Andhra Pradesh, and Kattupalli and Ennore in Chennai) representing 24% of the country's total port capacity.

The company is also developing two transshipment ports at Vizhinjam, Kerala and Colombo, Sri Lanka.

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

NNN