Pipavav in Talks to Buy European Operator of Rigs
Pipavav Shipyard Ltd., an Indian shipbuilder that counts billionaire John Fredriksen"s shipping line as a client, is in talks to buy an oil rig and shipping company in Europe, Chairman Nikhil Gandhi said.
Pipavav has 1.78 billion rupees ($40 million) in cash that it can use for the purchase, Gandhi said without disclosing names of potential target companies.
A 74 percent gain in oil prices in the past year is encouraging companies to boost oil and gas exploration, said Param Desai, an analyst at Angel Broking Ltd. Pipavav expects a presence in the European shipping industry to help it attract new customers, Gandhi said.
?Since there is a recovery in oil prices, we expect development in drilling activity in mid-to-deep water to go up,? said Angel"s Desai. ?The offshore market looks very good for the next 2 years to 3 years.?
Pipavav"s shares gained 0.5 percent to 86.1 rupees at close of trading in Mumbai. The benchmark Sensitive Index dropped 1 percent.
Pipavav"s largest investor, SKIL Infrastructure Ltd., plans to raise 15 billion rupees ($338 million) from an initial share sale before the end of this year, Gandhi, who is also chairman of SKIL Infrastructure, said. The company will use the proceeds to pay debt.
SKIL last month bought 19.43 percent stake in Pipavav from Punj Lloyd Ltd. and also offered to purchase an additional 20 percent stake from other shareholders.
Mumbai-based Pipavav also plans to expand capacity in the next six months to 18 months and will add one or two dry docks at the existing facilities, Gandhi said.
The company"s customers include Golden Ocean Group Ltd. led by Fredriksen. Pipavav has orders valued at $950 million from customers including Golden Ocean and India"s Oil & Natural Gas Corp., Gandhi said.