KUALA LUMPUR: Deleum Bhd has acquired a 70 per cent stake in Indonesia-based PT OSA Industries Indonesia for US$ 7 million (about RM31.3 million), bolstering its capacity to meet rising demand for valve solutions across Southeast Asia.
The acquisition, undertaken through its subsidiary Deleum Services Sdn Bhd, complements Deleum's existing expertise in total valve management solutions via its subsidiary, Penaga Dresser Sdn Bhd.
"This acquisition unlocks new opportunities, combining the technical expertise of both companies to enhance service quality and address the growing demand in the oil and gas sector. It also paves the way for talent development and cross-border experience for employees,"Deleum's Group CEO, Rao Abdullah said.
Deleum will pay for the acquisition cost through internal funds and bank borrowings.
PT OSA comes with a guaranteed a cumulative profit of US$ 2.7 million of 2024 and 2025.
PT OSA, established in 1994, is a leading supplier of valves and maintenance services in Indonesia, with notable partnerships such as its exclusive distribution of Baker Hughes valves.
This acquisition will extend Deleum's footprint, allowing it to serve energy majors more effectively while tapping into Southeast Asia's dynamic valve market.
Rao said that they have ambitions to grow beyond Malaysia and Indonesia, with Thailand and Vietnam as the next natural markets.
Penaga Dresser CEO Azman Jemaat said that while Penaga Dresser is currently double the size of PT OSA, the market for control and pressure relief valves in Indonesia is significantly larger, with an operating expenditure market size of US$ 52 million (RM230.41 million) which is more than double the amount of Malaysia's, USD 25 million (RM110.78 million).
Moreover, in Malaysia, Deleum holds a 36 per cent market share of the control valves market and 22 per cent for pressure relief valves market, whereas PT OSA commands an 11 per cent share in Indonesia's control valves market and 5 per cent for pressure relief valves. "There's clear potential for growth when you analyse the numbers. If we use our current market share in Malaysia as a benchmark, achieving similar figures for PT OSA in Indonesia could be possible within the next five years," said Azman.
Rao said Deleum has seen robust financial growth, with revenue rising from RM587 million in 2020 to RM792 million in 2023 and operating profits nearly tripling to RM80 million during the same period.
"Our robust financial position has enabled us to earnestly explore inorganic means of business expansion to catapult our growth, increase our presence and enhance our suite solutions to better serve the energy majors," he said.