Reliance Industries may buy 26% stake in Pipavav Shipyard

RIL may pick up a 26% stake in Pipavav Shipyard (PSL), India’s largest integrated shipyard with an exposure to offshore structures for oil & gas structures. According to Pipavav's promoter company SKIL Infrastructure, it is likely to issue fresh 26% equity to the strategic investor. However it was not  disclosed who the investor was. SKIL, the promoter of Pipavav Shipyard, holds a 39.5% stake in the company. The acquirer will also make an open offer to the public at the same price after the deal is closed. An RIL spokesperson said that the company does not comment on market speculations.

The non-promoter shareholding in Pipavav Shipyard is 60.44%, out of which, 43% is owned by domestic and foreign institutional investors. Major investors include Trinity Capital (6.89%), New York Life Investment Management India Fund II (4%), Citadel (3.45%) and IL&FS (5.35%). In March 2010, SKIL Infrastructure Group had bought a 19.6% stake from Punj Lloyd, the other major shareholder, through a negotiated deal at Rs 49.80 per share. Subsequently, it gave an open offer to public for 20% which received weak response.

The company has recently bagged an order amounting Rs 2,600-crore to build offshore patrol vessels for the Indian Navy. The deal is to construct about five patrol vessels, each with a displacement of about 2,000 tonne. Pipavav Shipyard has an order book of about Rs 4,500 crore.