Aban Singapore IPO To Be India's Largest Abroad

MUMBAI: Aban Singapore, a wholly-owned subsidiary of Aban Offshore, is to hit the Singapore stock exchange with India’s largest IPO abroad for a subsidiary company.

The $4-billion company, which acts as Aban’s hub for its international activities, is to offload around 13-15% for $500 million, and the IPO is slated for December 2007, say sources.

Aban has appointed UBS and Merrill Lynch as lead managers. They are currently undertaking a fresh valuation exercise. The offshore drilling giant and its arm have seen a major re-rating following the recent take-over proposals received by an industry peer — the UK-based Abbot Group, from various PE players.

On Wednesday, Aban’s share price fell 1.3% to Rs 3,971 on the Bombay Stock Exchange (BSE). The stock price has gone up four times from the 53-week low of Rs 1,010 recorded on October 30, 2006.

Efforts by ET to reach Aban’s top management were futile. An e-mail query did not elicit any response. “Aban’s market cap is currently hovering around Rs 15,000 crore.

With charter rates in the offshore sector reaching out for new peaks, Aban is enjoying excellent cash flows from operations,” say sources. The Singapore arm’s fleet size is almost double the size of the parent. It is 100% owned by Aban Offshore through another wholly-owned subsidiary Aban Holding.

The Singapore IPO is aimed at refinancing its existing debt, which is around $1 billion, thanks to last year’s acquisition of Norwegian offshore drilling company Sinvest in a $1.3 billion deal.

Aban had tried to raise PE for the Singapore subsidiary but later decided to go for the IPO. Aban Singapore and its wholly-owned subsidiary Aban International Norway owns 100% of Sinvest.

The Singapore subsidiary manages Aban’s international play, say sources. According to an equity report by Macquarie Research, the company operates across South Asia, which has witnessed tremendous growth in offshore drilling activity also expects operating rig day rates to rise in the region.

The subsidiary owns and operates 11 jack-up rigs and 2 drill ships, while the Chennai-based parent has 5 jack-up rigs, one drill ship and a floating platform unit (FPU). One rig, currently being built, is expected to be delivered in March 2008. The client list includes ONGC, Hardy Exploration and Production (India), Oriental Oil Co (Dubai), Hindustan Oil Corporation Company, Shell Brunei, Shell Malaysia, Cairn Energy, ROC Oil (China) Company and GSPC.

Aban has fixed most of its offshore assets on long-term charters, and managed to accrue benefits of the booming charter market.

Recently, the company chartered a rig to GSPC for a firm period of 2 years with 2 options of 6 months each thereafter at mutually agreeable rates. The contract is expected to result in revenues of around $141 million during the firm period.

Sources said the company delayed the IPO for a while, to fix all rigs under new contracts with fresh rates, in order “to get better valuations”.

The company recently informed stock exchanges that Venture Drilling, owned 50:50 by Sinvest, a wholly-owned subsidiary, and Petrolia Drilling, has commenced drilling operations on June 30, 2007, under the drilling contract with Exxon-Mobil for deployment of the drillship Valentine Shashin to be renamed Deep Venture — with an estimated contract revenues of $220 million during the contract period of 18 months.

Aban Offshore has also entered into deal with Bulford Dolphin to purchase a semi- submersible rig `Bulford Dolphin' for $211 million, and its delivery is expected by 2007-end.