Private equity is turning its attention to the region's workboat industry, driven by strong demand for offshore service vessels in the oil and gas sector and land reclamation projects.
With deals in other parts of the world drying up because of the credit crunch, the Middle East offshore marine market is seeing a surge in investment and is likely to experience "a wave of consolidation in the next few years", said Geir Sjurseth, managing director and global head of the Offshore Group at DVB Bank, Germany, which specialises in the global transport market.
Sjurseth was speaking at Workboats Middle East, which runs at the Abu Dhabi National Exhibition Centre until today under the patronage of the Minister for Public Works and Chairman of the National Transport Authority Sheikh Hamdan bin Mubarak Al Nahyan.
Sheikh Hamdan said: "The show represents an important platform for the industry in light of current developments and land reclamation under way 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 and barges to dredgers and tugboats. More than 2,000 workboats are docked or being repaired in the Middle East, which has drawn 100 suppliers to the exhibition to promote their businesses.
Christopher Hayman, Chairman of Seatrade, the organisers of Middle East Workboats, said: "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."
In his presentation on sources of finance 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 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 (Dh5.5bn) acquisition 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.bn.
And last year Abraaj Capital, a Dubai-based private equity company, announced the acquisition of the UAE-based GMMOS Group, which operates in the Gulf and Caspian markets.
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