Halcyon and HSBC PE in race for Franklin Offshore

The Singapore-based mooring business is backed by London-listed private equity firm 3i and is expected to fetch up to S$300m. 3i invested in Franklin in 2007 with a view to list the company on the Singapore Stock Exchange.

Halcyon Investment Corporation and HSBE Private Equity intend to bid for deepwater mooring specialist Franklin Offshore, in which 3i Group has a stake of about 35 percent, according to sources close to the firms.

Emerging markets private equity firm Actis Capital has also been named in media reports as a rival bidder.

Halcyon and HSBC Private Equity declined to comment. 3i and Actis did not respond to requests for comment at press time.

Set up in 1985, Franklin Offshore works with oil majors, rig owners and offshore contractors to design, manufacture, certify and manage a range of deepwater mooring products, services and equipment. Based in Singapore, the company’s operations span Azerbaijan, the Middle East, UK and the US.

“Franklin Offshore’s after-tax income in 2008 was S$50 million ($34 million; €25 million). So market valuations for the business are between 5x and 6x earnings, which mean price expectations for the company range between S$200 million and S$300 million,” a source said.

HSBC Private Equity has been looking to bid since April while Halcyon’s bid will likely be made through Halcyon Energy Corporation, a wholly-owned subsidiary of the firm, the sources said.

3i invested an undisclosed sum into Franklin Offshore in July 2007.

Presently, 3i is considering a rights issue as part of ongoing efforts to reduce its debt burden, which stood at £2.1 billion at the end of 2008. In March, the firm sold a stake in Mundra Port and Special Economic Zone (MPSEZ) for INR1.7 billion ($34 million; €25 million).

Based in Singapore, Halcyon is an investment firm targeting opportunities in the energy sector and its supporting service industries. 

HSBC Private Equity is the private equity wing of HSBC Group, the banking and financial services conglomerate.

Actis invests in Asia, Africa and Latin America through a network of 13 offices in 11 countries.