Aegis Vopak Terminals seeks to raise around $500 million in a $3-billion IPO, as it goes after growth

Chemicals and oil storage and logistics solutions provider Aegis Vopak Terminals, which is a joint venture between India's Aegis Logistics and Dutch company Vopak, is likely to file its draft red herring prospectus for a $500-550 million initial public offering in the coming days, said three people aware of the development. 

The company is likely to be valued at $3 billion, they added. 

The company has appointed several investment banks to prepare the groundwork for the IPO, and the paperwork for it will be filed soon, said one of the people cited above. 

According to him, BNP Paribas, ICICI Securities, IIFL Securities and Jefferies have been appointed by the company to manage the issue. 

Aegis Vopak Terminals Ltd., a 51:49 joint venture between Aegis Logistics and Dutch storage infrastructure firm Vopak—provides storage and logistics solutions for chemicals, oils, gases, LNG and biofuels in the country. 

Also read: Aegis Logistics stock surges 9% to new high after Q4 results, up 23% in 2 sessions

The company is expected to be valued at around $3 billion, and the bankers are exploring opportunities to see if a pre-IPO funding round can be rolled out to set the valuation benchmark, said the second person cited above. 

Chasing funding for growth

Aegis Vopak Terminals Ltd. (AVTL) is India’s largest independent tank storage company for LPG and chemicals. The company owns and operates terminalling assets in ports in Pipavav, Haldia, Kandla, Kochi and Mangaluru. 

It has a cumulative gas terminalling capacity of 70 thousand metric tonnes, and liquid terminalling capacity stands at 1,330 thousand kilo litre, a ratings note by India Ratings had stated in January 2023.

In response to queries from Mint, a spokesperson for Aegis Logistics, said, “Aegis Vopak Terminals Ltd (AVTL) is exploring options to fund future growth for AVTL. These options may include, among others, a potential fund raise by way of public issue, preferential issue, or a combination thereof, of the equity shares and debt for the JV company and as may be decided by the AVTL board in absolute discretion and permitted under applicable laws and regulations.”

The spokesperson added that the company has not yet made a final decision regarding the IPO, and it is still exploring its future funding options. 

Also read: Hyundai's IPO may inspire other MNCs to list in India for valuation gains

“No final decisions have been made at this point in time and there is no certainty on the outcome of this exploration of growth funding options. Further announcements will be made as and when required. No further details can be disclosed,” the spokesperson said.

Spokespersons for BNP Paribas, ICICI Securities, and IIFL Securities did not respond to queries sent by Mint, while Jefferies declined to comment. 

One among many

Aegis Vopak joins a growing list of global companies that are looking to list their Indian subsidiaries in the domestic market. For instance, South Korean carmaker Hyundai, and white goods manufacturer LG Electronics, along with Italy-based automotive components maker Carraro, among others, are either already in the process of listing or contemplating one.  

Some previous examples of multinational companies that have listed their Indian subsidiaries here, include Japanese automaker Suzuki’s Indian counterpart Maruti Suzuki; British consumer goods company Unilever’s Hindustan Unilever; Switzerland-based food and beverages company Nestle’s domestic arm Nestle India, and American oral hygiene brand Colgate Palmolive’s subsidiary by the same name.

Also read: Flipkart-backed Zinka Logistics Solutions files draft IPO papers with SEBI

Siddharth Shah, a senior partner at Khaitan & Co. told Mint recently that a strong brand recall among their Indian consumers, lower cost of capital as opposed to transferring funds from overseas markets, and lesser taxes on capital gains post listing for any future monetization, are crucial benefits that are attracting foreign companies to consider listing in the country. 

According to him, the Indian markets offer much better valuation today compared to other overseas markets.