US-based Safesea, Megha Engineering and Infrastructure and a consortium led by NRI businessman Ravi Mehrotra have been shortlisted as potential buyers for the government of India’s stake in Shipping Corporation of India (SCI). The three bidders, who had submitted expressions of interest (EoIs) for the ship owner on March 1, have qualified after meeting technical and financial criteria and receiving security clearances.
Safesea, Megha Engineering and Infrastructure and Ravi Mehrotra’s Foresight Group confirmed having qualified for the next round of the bidding process when contacted.
Among other parties that had submitted an EoI was a consortium of private equity firm Bain Capital and shipping company JM Baxi. The consortium is said to have encountered a technical issue with its application, according to informed sources.The three shortlisted bidders will be issued a request for proposal and sign a confidentiality undertaking after which they will be permitted to carry out due diligence on the ship owner, as per conditions laid out in a preliminary information memorandum that was issued by the government on December 22.
The government is selling its 63.75% stake in SCI. The successful acquirer will also have to make an open offer for a further 26% in the company held by the public shareholders as per change of control or takeover norms prescribed by the Securities and Exchange Board of India. GoI’s department of investment and public asset management is the nodal body supervising the privatisation exercise. SCI’s shares were trading at ₹ 115 apiece at the close of trading on Thursday. Based on this, a potential acquisition could cost the winning bidder about ₹4,813 crore or $652 million.
CARVE OUT
However, the shipping company will carve out its real estate before its privatisation as per a government directive. It owns an office building in South Mumbai and high-rise residential buildings in the city as well as a training institute. This could reduce the price that the acquirer pays for the company if only the core shipping business is transferred, according to people in the know.
SCI is involved in the business of transporting goods and passengers. Its own fleet includes bulk carriers, crude oil tankers, product tankers, container vessels, passenger-cum-cargo vessels, LPG/ammonia carriers and offshore supply vessels.
As of November 30, 2020, the company owned a fleet of 59 vessels. The company clocked revenue of Rs 4,668 crore for the financial year ended March 31, 2020 and profit of Rs 336 crore.
Safesea is a New Jersey-headquartered shipping company started by Indian-origin businessman SV Anchan two decades ago. It owns a fleet of 14 vessels and has trans-continental operations. PV Krishna Reddy-promoted Megha Engineering and Infrastructure is a diversified group with interests spanning oil drilling, construction, aviation, media and power.
UK-based Mehrotra is a former Shipping Corporation of India employee and started his career with the public sector company in 1964 as a marine engineer. He subsequently set up Foresight Group in London in 1980s.
The company is engaged in the business of oil drilling.
