Three Unusual Bidders Line Up to Buy Bankrupt Pipavav Shipyard
The final bids in a bankruptcy auction for India's largest private shipyard have been submitted, and the list of potential buyers has narrowed to three unconventional owners - a global container terminal operator, a steelmaker and the world's biggest broker for vessel demolition sales.
Pipavav Shipyard, founded in 1997, is the largest private shipbuilding firm in India and the first non-government yard in the nation to receive a naval shipbuilding order. Indian conglomerate Reliance Group took control of the yard in 2016 after a debt restructuring, but by 2019, Pipavav - renamed Reliance Naval and Engineering Ltd (RNaval) - was again unable to make payments on its loans. Its bankers initiated bankruptcy proceedings to recover an estimated $1.2 billion in debt, and the Indian Navy canceled its order for a series of patrol vessels. The firm has been on the auction block since late last year, but due to COVID-19 disruption, the sale has been extended.
Russian defense shipbuilder United Shipbuilding Corporation (USC) expressed early interest in buying the Pipavav yard, hoping to have an Indian facility to compete for a new Indian Navy submarine procurement contract. However, USC has backed out of the bidding, citing uncertainty about the prospects of Indian government orders.
According to multiple Indian media sources, the remaining bidders are Maersk's terminal operating arm, APM Terminals; steelmaking conglomerate Jindal Group; and a consortium composed of cash buyer GMS and Turkish shipping/shipbuilding company Besiktas Group. The buyers could realize potential synergies through ownership of the yard: APMT owns a port facility directly adjacent to the Pipavav facility; Jindal Group has expressed interest in selling its steel to its own shipyard; and GMS, which buys defunct ships for sale to scrapyards, would acquire its first in-house facility.
The sale is somewhat complex, according to the Business Standard, because of disputed lease agreements on the land on which the yard sits. The site's ownership is divided between the Gujarat Maritime Board and a second Reliance subsidiary, E-Complex, which is undergoing its own separate bankruptcy proceeding.