Aegis and Vopak joining forces for LPG and chemical storage in India
12 Juli 2021 - 8:15PM
Aegis and Vopak joining forces for LPG and chemical storage in
India
Aegis and Vopak joining forces for LPG and chemical storage
in India Mumbai, India / Rotterdam, the Netherlands, 12 July
2021 Today, Aegis and Vopak announced that the companies have
decided to join forces in India with the aim to grow together in
the LPG and chemicals storage and handling business. The new
partnership Aegis Vopak Terminals Ltd will operate a network of 8
terminals that are located in five strategic ports along the east
and west coast of India. With a total capacity of around 960
thousand cbm, the partnership will become one of the largest
independent tank storage companies for LPG and chemicals in India.
LPG is earmarked by the Indian government to provide cleaner and
safe cooking fuels for households. The partnership is well
positioned for further growth, which targets mainly LPG and also
chemicals and industrial terminal opportunities. This investment is
another step for Vopak towards its strategy to allocate capital to
grow in gas markets. “This joint venture with Vopak will accelerate
the growth of Aegis in the terminals business and has the potential
to allow Aegis to diversify into new areas of gas storage such as
LNG and other energy projects including renewables in partnership
with the world’s leading independent tank storage company. We
expect the deal to be significantly earnings enhancing for Aegis
shareholders due to the deployment into growth opportunities of the
combined financial firepower of the two groups and management in
the terminals business.” said Raj Chandaria, Chairman of Aegis
Logistics Ltd. "This is an investment in a growth market and
by joining forces with Aegis we aim to deliver growth over the next
ten years in line with the new joint ventures’ and India’s ambition
for LPG.” said Eelco Hoekstra, Chairman of the Executive Board and
CEO of Royal Vopak. “We are very excited for this new partnership.
Aegis is a reputed local partner with a ready organization and
proven track record of conceiving and executing tank farm assets in
strategic locations along the Indian coastline." The
transaction is expected to close early 2022, subject to customary
closing conditions. Joint venture structureThis transaction
entails two separate legal entities that Vopak will simultaneously
buy into on the basis of joint control:
- The Aegis Vopak Terminals Ltd
entity, in which Vopak will acquire a 49% shareholding. Vopak's
existing CRL terminal entity in Kandla will become a wholly owned
subsidiary of Aegis Vopak Terminals Ltd. Aegis’ network of terminal
assets at 5 different locations in Kandla, Pipavav, Mangalore,
Kochi and Haldia covering the west and east coast of India will be
added to the joint venture asset base.
- The Hindustan Aegis LPG Ltd
entity, in which Vopak will acquire a 24% shareholding. This is
currently a joint venture between Aegis and Itochu. After the
transaction Aegis will own 51% and Itochu will continue to hold
25%.
Financial detailsThe enterprise value for Vopak’s
shareholding in the joint ventures will amount to EUR 185 million
plus EUR 15 million, depending on the fulfilment of certain CP’s.
The project and Vopak equity IRR are expected to be double digits.
Vopak and Aegis have arranged financing of EUR 153 million in the
joint ventures. Taking into account this financing and the
contribution of CRL, Vopak’s net consideration amounts to EUR 100
million plus EUR 15 million depending on the fulfilment of certain
conditions. In addition to the net consideration at closing
of a total EUR 115 million (EUR 100 million plus EUR 15 million),
Vopak and Aegis have agreed the payment of a minimum EUR 18 million
and up to a maximum of EUR 40 million payable to Aegis via a
financial instrument. Revenues of the both joint ventures are
forecasted to grow with a CAGR of around 6% in the first 5 years.
LPG revenues will be about 75% of the total revenues of the joint
venture. On the back of the forecasted revenue growth, the joint
venture is expected to increase EBITDA in line with revenue growth
towards 2026 driven by growth of LPG demand and imports of liquids
chemicals in India. In addition, the joint venture has a pipeline
of growth projects, both brownfield and greenfield. Based on these
EBITDA contributions, the implied EBITDA multiple of Vopak’s
investment decreases from 11x in 2022 to 8x in 2026. The
ROCE, on the Royal Vopak level, is projected to come within the
10%-15% target range after 6 years, subject to growth developments.
This transaction will be marginally accretive to Vopak EPS in the
first years.
Normal Purchase Price Allocation (PPA) accounting will apply,
including recognition of goodwill as part of the carrying amount of
the joint ventures. The consideration is to be measured at fair
value at closing date. Any subsequent changes for the part of the
consideration not yet settled, will be remeasured at fair value
through profit or loss as an exceptional item until settled. CRL is
currently a 100% subsidiary of Vopak. Upon closure of this
transaction, this will change to joint control as CRL will be part
of Aegis Vopak Terminals Ltd. Therefore, CRL is classified by Vopak
as held for sale per 30 June 2021. The expected non-cash accounting
impact of the deconsolidation of CRL, among others due to recycling
of historical unrealized currency translation losses from other
comprehensive income, will be recorded as an exceptional item upon
closing. This press release contains inside information as
meant in clause 7 of the Market Abuse Regulation.
Profile VopakRoyal Vopak is the world’s leading
independent tank storage company. We store vital products with
care. With over 400 years of history and a focus on sustainability,
we ensure safe, clean and efficient storage and handling of bulk
liquid products and gases for our customers. By doing so, we enable
the delivery of products that are vital to our economy and daily
lives, ranging from chemicals, oils, gases and LNG to biofuels and
vegoils. We are determined to develop key infrastructure solutions
for the world’s changing energy systems, while simultaneously
investing in digitalization and innovation. Vopak is listed on the
Euronext Amsterdam and is headquartered in Rotterdam, the
Netherlands. For more information, please visit www.vopak.com
Profile Aegis GroupAegis Group plays a key role in
India’s downstream oil and gas sector, and its flagship company,
Aegis Logistics Limited, is India’s leading oil, gas, and chemical
logistics company. Our vision is to be the industry leader in our
business segments by delivering superior customer service with a
focus on quality, safety, and environmental standards. The Group
has five distinct but related business segments, and operates a
network of bulk liquid handling terminals, liquefied petroleum gas
(LPG) terminals, filling plants, pipelines, and gas stations to
deliver products and services. The client base includes many
leading industrial companies in India as well as individual retail
customers whom the company serves at their Aegis Autogas stations.
Aegis Group also operates internationally through its sourcing and
trading subsidiaries located in Singapore. Aegis Logistics Ltd. was
incorporated in 1956 and its shares have been listed on the Bombay
Stock Exchange since 1978. Its shares also trade on the National
Stock Exchange. For more information, please visit
www.aegisindia.com
For more information:
Vopak - PressLiesbeth Lans, Manager External
Communication, global.communication@vopak.comVopak - Analysts
and investorsFatjona Topciu, Head of Investor Relations,
+31(0)10 400 2776, investor.relations@vopak.com Aegis - Analysts
and investorsMs. Payal Dave, +91 9819916314,
Payal.Dave@linkintime.co.inMr. Sagar Shroff, +91 9820519303,
sagar.shroff@linkintime.co.in
- 2021-07-12 Vopak press release Aegis and Vopak joining forces
for LPG and chemical storage in India
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