Private equity targets Middle East offshore marine

With deals in other parts of the world drying up because of the credit crunch, the Middle East offshore marine market is seeing the introduction of significant private equity investment and is likely to see "a wave of consolidation in the next few years," says Geir Sjurseth, Managing Director and Global Head of the Offshore Group at DVB Bank, of Germany, which specialises in the global transport market.

He was speaking at Workboats Middle East - the region's only dedicated event of its kind - which opened today and runs at the Abu Dhabi National Exhibition Centre until Wednesday (30 April) under the patronage of His Highness Sheikh Hamdan bin Mubarak Al Nahyan, Minister for Public Works and Chairman of the National Transport Authority.

After inaugurating Middle East Workboats, Sheikh Hamdan said:

"The show represents an importance platform for the industry in light of current developments and land reclamation underway in Abu Dhabi. There are a large number of marine projects including new islands, gas and oil operations which require marine transport and other related services."

The term workboats covers a range of vessels from offshore supply vessels, barges, dredgers, tugboats and specialised craft. More than 2,000 workboats are docked or repaired in the Middle East. The Workboats Middle East exhibition and conference features more than 100 key suppliers from the region and beyond.

"The Gulf region has become a major centre for the workboat industry with multi-billion dollar projects in oil and gas as well as port and waterfront developments around the Arabian Peninsula," said Christopher Hayman, Chairman of Seatrade, the organisers of Middle East Workboats.

In his presentation to the Middle East Workboats conference on sourcing of finance and equity for offshore support vessels, DVB Bank's Sjurseth said: "More Middle East owners are keen on mergers and acquisitions to make an immediate impact in the markets. The market is oil price driven and the offshore industry is seen as having long term growth with no sign of investment in oil and gas exploration and production cooling off or oil prices reducing.

"Family-run companies are willing to crystallise values and traditional supply vessel owners are moving into sub-sea and higher technology vessels. They are also moving out of local areas to participate in new geographical regions."

After several strong growth years, substantial war chests have been developed in the region for mergers and acquisitions. Recent examples include the $1.5 billion acquisition this year of Labroy Marine of Singapore by Dubai Drydock World. The acquisition led Dubai Drydock World into the rig-building market with an order book for jack-ups and offshore vessels worth $1.6bn. Last year Abraaj Capital, a Dubai-based private equity firm, announced the acquisition of the UAE-based GMMOS Group, which operates in the Gulf and Caspian markets.

Middle East Workboats has gained wide industry backing with sponsors including: ADNOC/ESNAAD/IRSHAD, Det Norske Veritas, Hadef, Lamnalco Group, NICO International, Svitzer Middle East Ltd, Wärtsilä Corporation and. Zahker Marine International. Supporting organisations include the International Marine Contractors Association and the Royal Institution of Naval Architects.