Why Swan Energy Is Raising More Than Rs 3,000 Crore

Textile manufacturer, real estate and oil company, Swan Energy Ltd., is raising Rs 3,316.5 crore via equity to repay debt.

The company approved the fundraise by issuing 4.95 crore equity shares of face value Re 1 each on Feb. 28, according to its exchange filing. The company has set the issue price at Rs 670 per equity share, a 4.73% discount to the approved floor price of Rs 703.29 per share.

According to the company, Rs 3,000 crore will be invested into its oil and gas units for repayment or pre-payment of certain outstanding borrowings.

What Does The Company Do?

Incorporated in 1909, Swan Energy was originally named Swan Mills Ltd. and was a cotton and polyester manufacturer. Over the years, the company has diversified into real estate, defence and shipbuilding, petrochemical manufacturing and the oil and gas sector.

Owing to heavy diversification, the company's revenue profile has also changed significantly.

From fiscal 2021 to the nine months ending December 2024, the contribution of the company's textile segment to its total revenue has declined from 66% to 4%, while the energy segment's contribution has increased to 16% from 11%.

The highest change in revenue contribution has been observed in its distribution and development segment, which has surged from nil in FY21 to 72% as of December 2024.

Object Of The Issue

The company is set to utilise Rs 3,000 crore from the fundraise for investment into its oil and gas segment subsidiaries, Swan LNG Pvt. and Triumph Offshore Pvt.

The investment will significantly reduce the borrowings they avail of. Rs 2,000 crore will be allocated to repay term loans availed by Swan LNG, while Rs 1,000 crore will be allocated to Triumph Offshore. This would also reduce Swan LNG's and Triumph Offshore's term loan borrowings by 94% and 88%, respectively.

Oil & Gas Segment

Swan Energy first forayed into the oil and gas sector in 2012. The company began work on setting up a floating storage and regasification unit-based LNG terminal at Jafrabad, Gujarat, which is expected to commence operations in 2024.

Phase 1 of the company's LNG project is currently being implemented by its special-purpose vehicles—Swan LNG and Triumph Offshore. Swan LNG is responsible for the development of port facilities, while Triumph Offshore has built the new terminal with 1,80,000 cubic metres of storage capacity and the ability to regulate 1,000 million standard cubic feet per day.

The LNG terminal is set to be completed and will have an LNG regasification capacity of 5 million metric tonnes per year in Gujarat.

The company has also signed a concession agreement with the Gujarat Maritime Board for 30 (+20) years and has binding regasification agreements for a tenure of 20 years with some Indian public sector undertakings.

The company is also implementing a greenfield LNG terminal utilising an FSRU. Currently, the FSRU is used by outside parties, but once the port is constructed, it will be used by Swan LNG.