KUALA LUMPUR: Deleum Bhd is setting its sights on expansion in Southeast Asia after completing the acquisition of a 70% stake in PT OSA Industries Indonesia, group CEO Rao Abdullah said.
The US$7 million (RM31 million) PT OSA Industries deal is expected to be completed in the first half of 2025.
“Our ambition is to go beyond Malaysia and Indonesia for now. We have the aspirations,” Rao told a press conference today after signing of a share purchase agreement with OSA Industries Pte Ltd for the acquisition of the majority stake in PT OSA Industries.
After Indonesia, Deleum is looking at Thailand and Vietnam.
Rao stressed that Deleum is in a strong financial position with a solid balance sheet and a leading role in the gas industry.
“So, as set by the chairman and board, we have to put our cash to work and not just let it sit in the bank and earn 3% interest. We have to, yes, in short, we are looking at many opportunities.
“But we’ve got to make sure that at the same time, we don’t want to bite more than what we can chew. We’re mindful of that. And also, the industry has gone through a lot of ... it’s a volatile industry, let’s face it. So, we don’t want to get caught in that either,” he said.
Rao said Deleum has undertaken a balanced approach to growth via organic and inorganic means.
“Our financial position has enabled us to earnestly explore inorganic means of business expansion to catapult our growth, increase our presence, and enhance our suite of solutions to better serve the energy majors.”
Organically, Deleum enlarged its revenue base from RM587 million to RM792 million from the financial years ended Dec 31, 2020 to 2023.
Operating profits increased from RM27 million to nearly RM80 million in the same time frame.
The Deleum group, through its subsidiaries, provides supporting specialised products and services to the oil and gas industry.
Currently, Deleum’s expansion into Indonesia focuses on control valves and pressure relief valves as the core product line.
In Malaysia, it has a market share of 36% for control valves, compared to 11% in Indonesia (for PT OSA Industries).For pressure relief valves, its market share in Malaysia is about 22%, compared to 5% in Indonesia.
“In terms of market size in Indonesia from opex, it’s about US$52 million, compared to Malaysia’s approximately US$25 million. So, there’s a lot of opportunity in terms of the market size to tap into,” Rao said.
He added that the expansion will also allow them to set the foundation to expand other product lines, particularly chemical.
“We have been working on chemicals but without a presence there, we couldn’t move forward with it. This acquisition will allow us to expand our product line, which is the main focus for us. We are also very successful in the chemicals sector in Malaysia,” Rao said.
PT OSA Industries is a supplier of valves and valve maintenance services in Indonesia, including for the oil and gas industry. Since 2017, it has been the sole channel partner for Baker Hughes valves, such as safety and control valves, ball valves and actuators. PT OSA Industries serves energy majors supported by its service facility in Cikarang, Indonesia.
Deleum said the acquisition will complement and fortify the existing technical expertise and capabilities of its valve management segment through Deleum Services Sdn Bhd’s subsidiary, Penaga Dresser Sdn Bhd.
“It is the sole channel partner for Baker Hughes valves for the oil and gas, and energy industries in Malaysia. The location of service facilities in Terengganu, Johor, Sabah and Sarawak positions Penaga Dresser favourably to provide on-to-offshore services to international customers and principals,” it said.
The purchase consideration of US$7 million will be fulfilled via internally-generated funds and bank borrowings.
As part of the exercise, PT OSA Industries will provide a profit guarantee of US$2.7 million cumulatively across the financial years ending Dec 31, 2024 and 2025.
