Foreign Institutional Investors are making a beeline to pick up stake in domestic maritime companies.
Overseas investors have picked up 8 to 21 percent stake in mid-sized shipping companies, including Garware Offshore Services, Dolphin Offshore Enterprises, India and Shreyas Shipping & Logistics.
"FIIs show interest in offshore companies as they are not affected by freight rate volatility. The business models of these offshore companies are absolutely different from ordinary shipping companies," said industry sources.
They said a handful of investors had shown interest in picking up stakes in some other companies as well.
"The advantage of these companies are that they have assured cash flow and high valuation as they are tied up for long term contracts. In the case of Shreyas Shipping, it has no competition in container feedering. It plans to foray into logistics services as well," they said.
Hong Kong-based Fidelity Investment Management has subscribed to about $7 million worth Global Depository Receipts issued by the city-based Shreyas Shipping & Logistics.
"The GDRs subscribed by Fidelity will translate into 8.64 percent equity stake in Shreyas Shipping. The GDRs will be listed on the Luxembourg Stock Exchange," said Vinay Kshirsagar, chief financial officer, Shreyas Shipping.
Kshirsagar pointed out that it is the business model of Shreyas Shipping that has attracted foreign investors. The company's presence in the container feeder services could have also appealed to them, he added.
Another foreign investor, India Star (Mauritius), has picked up 10.86 percent stake in Mumbai-based Garware Offshore Services, formerly Garware shipping Corporation. The company will issue 20.90 lakh preferential shares to India Star (Mauritius) at Rs 72 per piece.
Aditya A Garware, vice chairman, Garware Offshore, said India Star found long term investment prospects in Garware. "It also expects Garware to foray into some value-added business," he added.
Clearwater, a New York-based investment firm, has also invested $15 million in the Mumbai-based marine operation and construction company, Dolphin Offshore Enterprises, India, through foreign currency convertible bonds.
The FCCBs, if converted, would give Clearwater a 21 percent stake in the company. The FCCBs were listed on the Singapore Stock Exchange and can be converted into equity shares of Rs 450 each.
