inside international industrials

SES to supply gasifiers to Brazil’s Vamtec Vitoria in deal worth more than USD 100m

Synthesis Energy Systems, Inc. (SES) is slated to supply coal gasification technology to a USD 400m Vamtec Vitoria SA biodiesel production plant, according to Vamtec Vitoria Feasibility and Project Director Jean Levitre.

The deal is likely to be valued at more than USD 100m. SES CEO DeLome Fair yesterday that the company remains in “strong consideration” for a project in South America that could net it over USD 100m in revenue, likely in reference to the Vamtec Vitoria project. Pressed by analysts for more information about the deal, she declined to provide further comment.

Vamtec Vitoria recently received a nod from the municipal legislature in Candiota, Brazil to build a local USD 400m methanol gasification-based biodiesel production plant, according to local media reports. The facility will provide 750 tonnes/day of methanol to the local market and utilize SES technology to gasify low rank coal.

Vamtec Vitoria has signed a letter of intent to purchase a 70MW turbine from Mitsubishi Groupsubsidiary Mitsubishi Heavy Industries for the facility. The company is also planning to build a 4000 t/d coal gasification train, 1300 t/d oxygen plant, 1300 t/d argon plant and 200 t/d argon plant. It is preparing an environmental impact assessment now that should be completed within two to three months. Vamtec will meet with its undisclosed investment partner in December to review the capex and opex of the project and, if green lighted,seek an EPC contractor by 2H17.

Vamtec is looking for financing to support the construction of the project, according to local media. The company is attempting to raise 70% of the value of the facility via the Banco Nacional de Desenvolvimento Economico e Social (BNDES) and the remaining 30% via equity investors. Levitre said it is in talks with various investors now and declined to provide more information.

The Vamtec Vitoria plant will help reduce Brazil’s reliance on imported methanol, a key component of biodiesel. Each liter of biodiesel contains about 12% methanol and Brazil currently imports about 1.5m tonnes of the chemical compound annually. Brazil has ramped up its biodiesel production in recent years, a development that has contributed to a 675m-tonne reaction of greenhouse gas emissions.

Based in Houston, Texas, SES sells technology that can convert low grade coal, biomass and municipal solid waste into energy products for applications in the power generation, industrial fuels, chemicals, fertilizers and transportation fuels industries. The company reported revenues of USD 500,000 for the three months ended 30 June, down from USD 4.6m on the year. As of that same day it had USD 13.8m in cash and cash equivalents and USD 2.4m in working capital.

SES has built extensive ties to industry and government in China over the last several years. It is angling to use its base of operations in the country to faciliate a global expansion in the company years. For example, the company’s Chinese joint venture with Suzhou Thvow Technology Co Ltd, known as Suzhou Tianwo SES, is likely to be involved in supplying equipment to SES’ projects in South America, CEO DeLome Fair said earlier this year. Simon India Ltd, another SES partner based in India, is also likely to be involved, Fair said at the time.

SES declined to comment on this story.

 

Our database contains intelligence on more than 20,000 projects and opportunities across China, India and Latin America. To find out more and request a trial, contact us here 

Advertisements

Opportunity of the Week: CSSC awards machine tool contract to European companies

CSSC Marine Power Co, a subsidiary of China State Shipbuilding Corporation (CSSC), has recently purchased a variety of production equipment via international tenders, said the tender agent. CSSC chose Fives Landis Ltd’s crankshaft grinder, IMT Intermato SpA’s CNC turn-mill center, Hexagon AB’s gantry coordinate measuring machines, and horizontal machining center from Juaristi TS Comercial SL, said Huang Pianpian from Beijing Rui Chi Fei Si Tender Co, the appointed agent representing CSSC in this case.

Those orders will be delivered within an eight to 18 months period at various Chinese ports such as Nanjing and Anqing.

CSSC is strengthening its position in China’s engine market even with the current low market demand. In July, it acquired a 30% stake in two-stroke JV Winterthur Gas & Diesel (WinGD) from its partner Wartsila Corporation; following the transaction, CSSC owns 100% of WinGD. Market research shows that in China’s medium-speed diesel engine market, Weichai Heavy Machinery and CSSC Marine Power take up a 58.9% market share. In October 2015, CSSC Marine Power renewed the contract with MAN Diesel & Turbo for another 10 years of production of four-stroke medium speed engines. In May 2016, the company’s 6S60ME low-speed diesel engine started operation. The latest designed model is the largest diesel engine constructed by CSSC Marine Power, which weighs approximately 390 tons.

 

IIICorp’s deal origination tool provides early-stage, actionable intelligence on opportunities in the world’s fastest-growing markets. For more information, visit https://www.iiicorp.com/ContactUs

IIICorp Opportunity of the Week: Unitel’s two-pronged strategy gains momentum in Southeast Asia, lands PT Pertamina catalyst systems deal

Unitel Technologies is supplying Indonesian state-owned oil firm PT Pertamina with its proprietary Octave catalyst research system under the terms of a deal signed recently, according to CEO Serge Randhava. Meanwhile, the company is laying the groundwork to capitalize on a major natural gas-related opportunity in the region.

The deal with PT Pertamina is likely to be worth about USD 2m for the Matawan, New Jersey-based specialty process engineering firm that designs and builds pilot- and full-scale oil and natural gas processing facilities. In March, the CEO told this news service that his firm was in talks to supply Octave systems to multiple oil companies in Southeast Asia.

Unitel’s revenues typically do not exceed USD 15m annualy because it’s primarily a technology firm and sub-contracts much of the engineering work required for its projects to other companies.

Regional LNG opportunities

Randhava said that the opportunity to sell catalyst research systems in Indonesia, and Southeast Asia at large, pales in comparison to opportunities to sell its process engineering services and technologies to the region’s liquefied natural gas (LNG) industry.

Unitel was selected earlier this year by the Korea Gas Technology Corporation (KOGAS) to conduct the front end engineering and design work needed to commercialize a “small-scale LNG business opportunity,” according to a press release from January. KOGAS, the world’s largest importer of LNG, is aiming to design, build and operate multiple 200 TPD LNG mini-plants that will create a virtual pipeline to supply product for local transportation fuel and power generation applications, Randhava said. Eventually, the Korean company would like to build the small-scale plants in countries in need of critical natural gas infrastructure, he said.

“The opportunities to develop small-scale LNG plants should be of great interest to countries like Vietnam, Malaysia and Indonesia,” Randhava said. “I’m excited about that; [KOGAS] is aggressive.”

One application for the small-scale LNG technology KOGAS is developing might be at the Vietnam Block B development, Randhava said. PetroVietnam is aiming to produce 107bn cubic meters of gas and 12.65 million barrels of condensate from offshore Block B, of which 5.06bcm are expected to be brought onshore per year from 2020 to 2040. The fuel is expected to be used to power plants in the Kien Giang and O Mon district of Can Tho city. The initiative entails an investment of about USD 6.08bn.

Randhava noted that the company plans to move onshore only about half of the gas it is producing from Block B. He said that it is likely planning ot either make LNG in small-scale plants onshore for distribution throughout the country, or convert it into dimethyl ether for use in Vietnam and neighboring countries.

Opportunity Size: 15m USD

 

IIICorp’s database contains thousands of past and upcoming project and trade finance opportunities and reports. Our subscribers have direct access to country-focused and sector-focused transaction flow, based on the model pioneered by our founder, Charlie Welsh, when he created Mergermarket. To sign up for a trial and to find out more about access to our full database, contact us here.

Exploring PE Investing in Niche Manufacturing & Industrial Services Companies with Capital Roundtable

Middle market industrial-focused private equity (PE) firms are increasingly turning to the world’s fastest growing economies to boost portfolio company returns at a time of sluggish economic growth in the US.

Growing a portfolio company’s international footprint is key to increasing returns today, according to participants in a recent Capital Roundtable conference entitled Private Equity Investing in Niche Manufacturing & Industrial Services Companies: Strategies for Enabling Profitability in a No-Growth Environment. Opportunistic international expansions into complex markets such as China, India and Brazil can distinguish a company from its competitors, in effect boosting its value to strategic buyers.

Bolt-on acquisitions of production facilities, suppliers, distributors or other assets appear to be the favored approach of PE companies keen to push portfolio firms into new markets. That’s because it’s challenging to facilitate organic growth via greenfield expansion projects in a roughly two to five year timeframe. Also, other forms of international expansion, such as joint ventures, frequently complicate both PE firms’ ability to control the day-to-day operation of portfolio company’s business and the process of exiting an investment.

Expanding via M&A does not come without challenges. Firms may find it difficult to navigate complex accounting, regulatory and compliance rules associated with new markets, according to attendees at the Capital Roundtable event. Also, they have difficulty identifying managerial talent in foreign countries, despite the emergence of new sources of talent in recent years.

Growing a portfolio company’s footprint beyond the US’ borders can be worthwhile, particularly for PE firms with the time facilitate long-term growth. But the expansion process is not without its pitfalls.

On Thursday 10 November, IIICORP and The Capital Roundtable will be hosting a conference entitled “Best Practices for PE Portfolio Companies to do Business Globally”.

 

Visit our newly-released website for more information on IIICorp’s deal origination platform. For more information on a trial, visit https://www.iiicorp.com/ContactUs