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ICICI Ventures to pick up stake in Temba

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ICICI Ventures

ICICI Ventures is close to picking up Rs 100 crore stake in Chennai-based mid-sized shipmaker Tebma Shipping. This would the first deal in the Indian shipping and logistics industry in 2007.

Tebma, which is a Rs 300 crore company, supplies to the Navy and is the only manufacturer of dredging ships in India. It is expanding into tug boats and naval ships. The ship building company has an order book of Rs 1,400 crore while the 2005-06 profits stood at Rs 12 crore.

The deal, to be announced soon, would involve Rs 60 crore in cash. The rest 40 crore would be through an open offer, sources close to the development said. An e-mail to Tebma Shipping went unanswered. ICICI Securities is the sole advisor to the deal.

Reliance Capital, now the part of the Anil Ambani group, has been early patron of Temba, with holdings in 2001.

Tebma is promoted and managed by first-generation entrepreneurs in the marine field. The company has a co-operation arrangement with the Dutch shipbuilder Damen Shipyards. Tebma is capable of manufacturing tugs up to 45-50 tonne 'bollard' pull capacity. Bollard pull refers to a test of a tug's capability to pull, measuring how many tonnes of pull are being applied.

Global activity in the private equity and venture capital space for shipping has shown phenomenal growth. About 20 deals were struck in 2006 for $1.62 billion, while the figure was $1.2 billion in 2005. The growth trend is expected to continue, sources said.

India's shipbuilding is poised for significant opportunities. There are 24 shipyards in India in medium and small category. Capacity of all Indian shipyards put together is close to 0.19 million Compensated Gross Tonnage (CGT) per year, according to industry estimates. Compared to the world new building capacity of 23 million CGT, India's share is less than 1 per cent.

The deal comes close on the heels of decision of L&T, India's largest construction company, to set up India's largest ship building yard in Chennai.