Bhagwan price revealed as offer about to close

Bhagwan Marine’s family owners will stump up for another half a million shares in the initial public offer which is set to close in the next day or so.

Bhagwan Marine is one of Australia's leading marine services operators.

Bhagwan Marine will be valued at a shade more than $170m on listing, having priced its shares at 63c ahead of the initial public offer closing this week.

The late July listing of the marine services company arguably couldn’t be better timed, what with Cyan Renewables’ takeover offer for similar company MMA Offshore indicating strong interest in the sector, and mutterings from some that the bid price should be even higher.

Bhagwan’s updated prospectus shows the company will have a market capitalisation of $173.4m with net debt of $17.9m, and a price to earnings ratio of 16.7.

The money raised will be used to pay down $44.5m in bank loans and $24.6m in shareholder loans, strengthening the company’s balance sheet to pursue growth opportunities.

Bhagwan, founded by the Kannikoski family in Geraldton, Western Australia, in 2000, sees opportunities for expansion in the offshore wind sector as well as the decommissioning of offshore oil and gas operations.

“Since its inception, Bhagwan has grown to have approximately 936 employees and a fleet of 96 vessels (of which 26 are leased),’’ the prospectus says.

“This makes Bhagwan one of the largest marine vessel operators and service providers in Australia.

“Bhagwan services a number of blue chip clients, including multinational oil and gas companies, large miners, construction companies, port authorities and government organisations.’’

The company has made a series of acquisitions over the past decade or so and now has operations across Australia. It has flagged in its prospectus that it is on the hunt for more potential deals.

The Kannikoski family will hold 40.4 per cent of the company post-listing, and will buy about half a million shares in the offer, while chairman Anthony Wooles will hold 8.5 per cent.

New shareholders joining through the IPO will hold 45.6 per cent.

Founder Lou Kannikoski will stay on as managing director on a salary of $524,000, while his wife Kerrren is general manager corporate services on $278,000 and son Tom is general manager - corporate and strategic development on $238,000.

Bhagwan is targeting a dividend payout ratio of 20 to 40 per cent of free cash flow at the discretion of the board, with net revenue expected to increase from $169m to $264.8m for the past financial year and net profit to fall from $20.4m to $10.4m, with the previous year inflated by a $7.3m tax benefit.

The offer is scheduled to close on Thursday with the ASX listing scheduled for July 30.

The offer is fully underwritten by the lead manager Euroz Hartleys.

Originally published as Bhagwan price revealed as offer about to close