Posted on August 7, 2017
By Reeba Zachariah & Boby Kurian
Shipping and dredging major Mercator is in early talks with Canadian investor Fairfax and Dutch company Van Oord to evaluate a bid for public sector undertaking Dredging Corporation of India (DCI), with Rs 1,700-crore, or $275-million, market value. The NDA government is expected to kick off a process to divest controlling shares in DCI, the country’s largest dredging company with a fleet of 19 dredgers, later this year.
DCI is the country’s largest dredging company with a fleet of 19 dredgers. The government owns a 73% stake in DCI, which is expected to attract other bidders such as Adani Ports & Special Economic Zone, JSW and Dharti Dredging in which Rakesh Jhunjhunwala holds a stake.
H K Mittal-led Mercator wants to take a financial or strategic investor along with it to bid for the asset. It is talking to both Fairfax and Van Oord. The eventual tie-up will depend on the result of the discussions around valuation and structuring comfort, sources familiar with the matter said.
Mumbai-based merger and acquisition advisory firm Singhi is assisting Mercator to put together a bid for DCI. Mercator and Singhi declined to comment. Mercator has had one round of discussions with Van Oord in the Netherlands regarding a tie-up, sources added. Van Oord, a part of the big four club of international dredging giants, has been active in India and could also explore other options to ramp up in the country. Indo-Canadian billionaire Prem Watsa-led Fairfax has turned out to be an active investor in India’s core sectors. It recently purchased GVK’s stake in Bengaluru International Airport as it scoops up long holding assets in one of the fastest growing economies globally.
Fairfax and Van Oord could not be reached for comments immediately. Mercator, Van Oord, Adani Ports and Dharti Dredging believe that the DCI platform offers significant benefit in terms of scale even as the Indian government ramps up spending in modernizing ports and cleaning up rivers.
Mercator plans to move the dredging business — with Rs 280-crore revenue and Rs 75-crore in ebitda — into a step-down subsidiary where it could bring in an investor or a strategic partner. Mercator, which is also into coal mining and oil & gas, had an operating profit of Rs 588 crore and annualized revenue of Rs 2,115 crore last fiscal.
Source: The Times Of India
