Adani Group is exploring the possibility of acquiring another large company to expand its business overseas. According to a Bloomberg report, Gautam Adani’s group is looking to buy a stake in Dutch energy storage company VTTI. This potential deal values the company at around 3 billion Euros, which is around Rs 30,000 crore. However, negotiations are still in the early stages and there is no guarantee of a deal.
Why Adani wants to buy VTTI?
Due to energy supply disruptions in many parts of the world and increasing uncertainty in the oil business, the importance of fuel storage terminals has increased. In such a situation, Adani Group’s interest in this business has increased. VTTI’s job is not just to transport oil from one place to another. The company stores crude oil, petrol, diesel, aviation fuel, cooking gas and various chemicals in its terminals. It also provides facility to mix, handle and forward these products if required.
When the fuel supply in the country is disrupted or there is difficulty in the movement of ships, the role of these storage centers increases. It helps traders secure fuel, sell it at the right time at the right price and transport it to other markets. This could give Adani an opportunity to increase its presence in more parts of the supply chain of the energy business.
VTTI’s business is spread across 16 countries
Headquartered in Rotterdam, Netherlands, VTTI operates in 16 countries around the world. The total storage capacity of the company is 91 lakh cubic meters, which is about 57 million barrels. The company’s terminals are connected to major energy trading centers in Europe, the Middle East, Asia, Africa and the Americas. It has a major terminal in Fujairah, United Arab Emirates. There are about 19.43 lakh cubic meter storage capacity, 66 tanks and jetties for 11 vessels. The location is one of the major hubs of the oil business and plays an important role in transporting energy from the Gulf countries to Asian markets. The company also has a large center in Amsterdam, where fuel blending is done along with storage of petrol and diesel.
What will benefit Adani’s port business?
Adani Ports and Special Economic Zone (APSEZ), an Adani Group company, operates ports in India and abroad. Its current business focuses on unloading, loading and transportation of goods from ships. If Adani buys VTTI, it may also acquire business related to storage and handling of energy products. With this, the group will be able to offer services from unloading cargo at the port to securing it and delivering it to the end buyer. In this way, Adani’s earnings will not be limited to just goods coming and going at the ports. However, the actual profit from this will depend on VTTI’s earnings, expenses and transaction price.
Who owns how much stake in VTTI?
According to a Bloomberg report, Australian investment company IFM Investors and energy business Vitol each hold about 45 percent stake in VTTI. The remaining 10 percent is held by Abu Dhabi’s state-owned oil company ADNOC. According to the report, ADNOC is considering selling its entire stake. At the same time, IFM Investors and Vitol may also sell some of their stakes. This could give Adani an opportunity to buy a bigger stake in the company. However, it is not yet clear how much stake Adani will buy or at what price the deal will be done.
