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Equity Holding 8 - PIPAVAV SHIPYARD

 
The International Maritime Organization’s decision to either scrap all single hull structure oil tankers or convert them into double hull structures by 2010 has revived interest in the shipbuilding sector across the globe, reinvigorating a $250 billion market. This global revival has translated into renewed interest in the Indian shipbuilding market and has led to an increase in the order book from about INR 15 billion in 2002 to over INR 100 billion today.

The Pipavav port started operations in 1996 primarily to cater to the refrigerated cargo market of Veraval but has over the years developed into a port handling cargo from various nearby and north/west India locations. It is the first private sector port in India controlled and operated by the A. P. Moller Group (Maersk) of Denmark - one of the largest maritime group’s in the world. It has been commercially operational for the last six years and has state of the art handling equipment, road networks and railroad connectivity, thus offering the necessary logistical support to the shipyard.

The Pipavav Shipyard is expected to be largest shipyard in India and amongst the largest in Asia, with the capacity to build and repair vessels of up to 400,000 DWT. The shipyard has an all-weather marine enclave and one of the shortest approach channels, allowing for easy ship movement and faster turnaround time.

The project is spread over 175 acres and is poised to become the world’s fifth largest shipyard. Upon completion of construction, the shipyard will be capable of ship construction and repairs for a range of vessels of different sizes and types, as well as the fabrication and construction of products such as offshore platforms, oil and gas rigs, jackets and vessels. The shipyard is being constructed on the principle of concurrent shipbuilding, which means that production of vessels can commence simultaneously as the Shipyard is built.

Highlights
  • The order booking has commenced and PSL has already booked orders worth US$1.05billion.

  • Along with Trikona TC, other private equity funds including New York Life, Standard Chartered, Deutsche Bank, Citadel and Merrill Lynch have made significant investments in the Company.

  • Since the interim results statement in November 2007, Blackstone invested in PSL at a valuation of INR 80 per share against the Company’s investment at INR 25 per share in January 2007.

  • The Company has entered into a strategic alliance with Punj Lloyd Limited (“PLL”), a leading engineering and EPC company with current market capitalisation of US$1.76 billion, and inducted them as co-promoters with a 23.11% stake. This alliance will enable the company to enter into the business of fabrication/construction of offshore platforms, SBMs and rigs with minimum lead time. As part of this alliance PLL will also transfer its existing fabrication business to the company.

  • Pre-fabrication and block assembly of first four ships commenced in April of 2008
 
 
 
 
 
View Project Details


£42.7 million*
Asset Class Infrastructure
Project Name Pipavav Shipyard Limited
Partner DB Pipavav Shipyard Ltd 
Location 
 Pipavav, Gujarat
Type Shipyard
Capital Invested £13.5 M
*NAV as of 31 March 2008 £42.7 M
Shares Owned 45.9 Million**
IRR at Date 172%
Multiple at Date 3.16

**Current percentage ownership of shares is 9.70 %.
 
© 2008 Trikona Capital