Aegis Logistics, Vopak to create Indian JV for LPG and chemical terminals
Aegis Logistics said that it will create a joint venture (JV) called Aegis Vopak Terminals Ltd (AVTL) with Dutch tank storage company Royal Vopak for developing LPG and chemical terminals in India.
Aegis Vopak Terminals will operate a network of terminals that are presently located in five ports along India’s east and west coasts. The network of terminals has a total capacity of nearly 960,000m3.
Aegis Logistics, which is owned by Aegis Group, expects Aegis Vopak Terminals to become a major independent tank storage company for LPG and chemicals in India.
Aegis Vopak Terminals will primarily target LPG as well as opportunities in chemical and industrial terminals.
For Vopak, the investment in the Indian joint venture is said to be another step in its strategy to allocate capital to expand in gas markets.
The Dutch tank storage company will have a 49% stake in Aegis Vopak Terminals, while Aegis Logistics will hold the remaining 51% stake. Vopak’s existing CRL terminal entity in the Port of Kandla in Gujarat will become a fully-owned subsidiary of Aegis Vopak Terminals.
Aegis Logistics will contribute its network of terminal assets at Kandla and Pipavav in Gujarat, Mangalore in Karnataka, Kochi in Kerala, and Haldia in West Bengal.
Raj Chandaria – Chairman of Aegis Logistics said: “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.”
As per the joint venture agreement, which Vopak will acquire a stake of 24% in Hindustan Aegis LPG, a joint venture between Aegis Logistics and Japan-based Itochu. Following the transaction, Aegis Logistics will reduce its stake to 51%, while Itochu will continue to own 25% stake in Hindustan Aegis LPG.
The joint venture deal will not affect Aegis Group’s Mumbai Liquid and LPG terminals and its LPG retailing business.
Vopak’s shareholding in the joint ventures will have a total enterprise value of €200 million. Apart from net consideration at closing of €115 million, the Dutch tank storage company and Aegis Logistics have agreed a payment of a minimum €18m and up to a maximum of €40m payable to the latter through a call and/or put option in 2025.
Aegis Logistics will get total gross pre-tax cash proceeds from the sale of up to INR 2,766 crores.
Eelco Hoekstra – Chairman of the Executive Board and CEO of Vopak said: “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.
“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 joint venture transaction, which is subject to customary closing conditions, is anticipated to close in early 2022.