14 July 2019interesting one. When Renaissance
acquired Topaz, it was a completely
different company. It was in oil & gas
fabrication, ship repair and owned
a dozen or so old ships. We grew it
into a global OSV fleet that in today’s
environment would be the No.2 or
No.3 OSV Company in the world. In
2014, out of the top 10 fleets globally, we
would have been seven or eight in the
world in terms of size. Unfortunately,
most of those companies have filed for
Chapter 11 or been restructured with
their shareholders losing most and, in
some cases, all their capital. To put it
in simple terms, this story is about a
small Omani company that goes out
into the market, builds a global fleet
that competes with the very best in the
world and that says a lot for Renaissance
and it says a lot for Oman. Honestly, His
Majesty has created an environment
that allowed us the freedom to succeed
and to compete with the very best in the
world and most importantly win. We
have done this not just at the Topaz level,
but also in Renaissance. We forayed
into Afghanistan and Iraq et al where
we were up against some of the largest
global corporations and we competed
and executed successfully. This says a lot
about our structures, our governance,
the outstanding management teams and
people of Renaissance. What a journey
- a wise man said it best “This is not the
end, it is not even the beginning of the
end, but it is, perhaps, the end of the
beginning” so that is the journey and the
spirit of enterprise within this company
and its people and there is much more
on the anvil.
You mentioned about various
companies in this sector filing
for Chapter 11 and wiping out
shareholder value. What enabled
Topaz to survive the downturn in the
hydrocarbon sector since 2014?
We all like to say that we do great things
because we are so smart, but the reality
of life is that you need to be smart,
patient, work hard and God has to be
kind to you. It’s a mix of all those things
but mostly God’s kindness that we were
able to come through this phase. A big
part of it was that we were in some
unique geographical areas, which were
not as exposed to global market trends
as some of the other parts of the world.
Our joint venture in Azerbaijan and our
contract in Kazakhstan gave us an edge.
It is important to understand how our
fleets get to those places – your ships
travel through the Volga-Don Canal and
depending upon the ship size, we need
to cut the bridge, place it on the deck
and then go through these canals, so it
is not easy to do. As a consequence, if I
had a ship chartered in the North Sea,
it would need to immediately adjust
to the prevailing global shipping rates.
Compared to this ships in Azerbaijan are
chartered on long term rates, because
getting the ship there is so tough that
the client wants to procure a contract
for three, five and at times seven years.
Having a particular skill and being in
a niche area are factors that gave us a
unique edge in the market.Market analysts felt that Renaissance
has been a highly leveraged company.
Will this transaction enable you to de-
leverage the company substantially?
Absolutely, Topaz is a great business
but it is an asset heavy model. Most of
our leverage came at the Topaz level,
as it was a big play. For a local Omani
company it’s a monster play and so now
our gearing will come down to 1.3 post
this transaction.What are the objectives that this
transaction fulfills for Renaissance?
The objective is to make Renaissance
a pure play on services, build an
asset light model, let it become a
dividend paying company with the
aim of providing superior returns to
its shareholders and to take away the
cyclicality that we had till now.How are the proceeds from the sale
going to be utilised?
We will keep some cash on the balance
sheet but most of it will go towards
paying off debt.Once the debts are paid off and your
gearing comes down, the company
will save and generate additional
cash. How are you going to utilise the
surplus cash that is expected to be
generated year-on-year?
As I mentioned earlier, the goal is to
start rewarding our shareholders and
to provide superior performance. This
will happen in two ways, one is throughthe growth in the value of the company.
Secondly, the pure play in the services
sector will allow for expanded multiples
and reward shareholders with as much
cash as we can.You mentioned about services being
a big play for the company. What is
your vision for Renaissance Services
from here on?
The beauty of our services model is that
many assets are already in place on
the ground. As IFM service providers
we step in and take over all the non
core services that large corporates or
government entities require so they can
focus on their core business. So if you go
to Almouj, BP Khazzan or so many other
facilities around Oman it is Renaissance
and its people executing the services..
Increasingly, this is becoming part
of institutional efficiency and we are
going to grow it, and move across all the
sectors in Oman and beyond. This is the
service element which is the basis of
our revenue model.To be able to provide our services
beyond pure contract services many
government and quasi government
agencies need to outsource complete
residential packages for their work
force e.g. PDO where Renaissance built
5 PAC (permanent accommodation for
contractors) and then the massive Duqm
development. We have branded these
as Renaissance Villages with 20 years
of experience. Today, if someone wants
to build a facility for a company and
they go to a bank for loans, the bank
runs an execution, development and
post execution risk. What’s great about
Renaissance is the fact that we provide
an entire package and have done so
successfully repeatedly. So we are almost
in a plug and play mode, we develop,
people can move in there, live there,
be fed, get housekeeping, recreation,
healthcare and every other form of life
support. When the entire service isunder
one roof, it is an unbeatable proposition
in terms of competitiveness.We also work as an enabler for growth in
areas like Duqm. Once the government
made a decision and formed SEZAD,
we rallied behind them, put up a
facility without assured occupancy, as
we believed in their vision and spentLEADERSPEAK