KUALA LUMPUR (May 20): Sarawak-based shipping company Hubline Bhd says it is in talks with state-owned equity firm Ekuiti Nasional Bhd (Ekuinas) for the potential acquisition of Orkim Sdn Bhd.

This confirms The Edge's report published for the week of May 20-26, entitled “Hubline said to be eyeing Ekuinas Orkim”. The deal is potentially worth RM900 million and Hubline is working with appointed bankers and advisers on the deal, according to the weekly, citing sources. 

“We have had discussions with Ekuinas to explore this opportunity,” said Hubline in a bourse filing on Monday. Ekuinas owns 95.5% of Orkim, a ship-owning company that specialises in energy transportation. 

These discussions are at a preliminary stage, Hubline said, as it is assessing the feasibility and strategic alignment of such an acquisition with its long-term goal. 

"Orkim, being a key player in the oil and gas logistic industry, represents a potential strategic fit to our portfolio, given its operations and market presence. We wish to emphasise that at this juncture, we are still in the discussion and evaluation stage and no definitive agreement has been reached," it said.

Hubline said the group continuously pursues opportunities that can complement or expand its operations to enhance its revenue base and returns to shareholders.

Appropriate announcements will be made as and when any material business opportunity materialises, it added.

The potential sale of Orkim has been in the news since May last year, when Bloomberg reported that Ekuinas was exploring the sale of the shipping company and was seeking as much as RM1.5 billion.    

Ekuinas bought Orkim in 2014 for RM346.3 million from Global Maritime Ventures Bhd, a Bank Pembangunan Malaysia Bhd subsidiary. 

Orkim began as a ship broker in 2004, before morphing into a ship owner five years later after taking delivery of its first vessel, according to its website. Its mainly transports clean petroleum products from refineries to various oil storage facilities. It currently has a 40% market share, and a fleet of 18 vessels with an average age of 10 years.

For the financial year ended Dec 31, 2022 (FY2022), Orkim more than doubled its profit after tax to RM27.94 million from RM11.83 million in FY2021, as revenue rose 27.4% to RM315.58 million from RM247.73 million. As at end-December 2022, Orkim’s assets stood at RM911.56 million, while liabilities came to RM531.51 million. 

Hubline operates a fleet of 21 tugs and barges with operating sizes of 8,000 and 12,000 tonnes of cargo per shipment. It also provides aviation services via Layang Layang Aerospace Sdn Bhd, which primarily operates from Kota Kinabalu, Sabah, and Ipoh, Perak. The regional charter airline currently owns 26 fixed-wing aircraft and helicopters.

Hubline's single largest shareholder is executive chairman Datuk Wee Liang Huat, with an 18.2% stake. Another notable shareholder is Datuk Ibrahim Baki, with a 3.6% stake. He has been a director of Petroliam National Bhd since 2020.

Hubline’s share price closed unchanged at four sen on Monday, bringing the group a market capitalisation of RM171.6 million.