IPO ... Bumi Armada

Oil and gas outfit Bumi Armada Bhd, which is controlled by T Ananda Krishnan, is set for a grand return with an IPO to raise up to RM9 billion.

While part of the IPO will be used as working capital, the company has serious plans to expand its foothold and perhaps purchase more floating production, storage and offloading (FPSO) vessels in the near future.

The draft prospectus shows that about 879 million new and existing shares will be offered, with the institution and retail portions to constitute 27.27% and 2.73% of the enlarged issued and paid-up capital respectively.

It is looking to invest RM6 billion to RM7 billion in the next two to three years.

According to the draft prospectus, RM775 million from the IPO will be used to repay bank borrowings while the rest is reserved for working capital and capital expenditure.

As at Dec 31, 2010 Bumi Armada had RM2.02 billion in long-term debt, RM1.39 billion in short-term debt and RM3.7 billion worth of assets.

The immediate goal for the company is to be the fourth largest FPSO vessel player globally by the end of 2013, by growing its fleet to six FPSO vessels from the current four.

Armada TGT1, which cost US$350 million, is expected to bring in US$700 million over the next seven years.

The Bumi Armada-Vietsopetro (VSP) alliance was awarded the contract in November 2009 for the leasing and operating of the vessel, under a fixed time charter of seven years with an option to extend it for up to 15 years.

It will be operating in Te Giac Trang, offshore Vietnam, for Hoang Long Joint Operating Company — a partnership including partners like PetroVietnam and Soco International.

Around 84.8% of its revenue for FY10 was derived from outside of Malaysia.

The company had entered into its first contract in Brazil, and is looking to grow its presence in Mexico, Angola, India and Indonesia.

For FY10, Bumi Armada’s net profit rose 26.4% to RM350.7 million from RM277.4 million the year before while revenue rose 70% to RM1.2 billion from RM732 million. Its profit has grown substantially since the firm was taken private in FY02 when it posted a net profit of RM63.4 million on a revenue of RM444 million.