Bhagwan Marine secures transformational $120 million Riverside acquisition
Bhagwan Marine Limited (ASX: BWN) has announced the acquisition of 100% of Riverside Marine Holdings for $120 million upfront consideration. The transaction, expected to complete on or about 31 March 2026, will be funded through a $70 million debt facility, $20 million in vendor shares, and a $30 million investor share placement. The deal includes a linear FY26 earnout of up to $10 million, triggered once Riverside’s EBITDA reaches $25.2 million and capped at $27.2 million.
Riverside is a 99-year-old business founded in 1926 by the Campbell family, with the sale driven by generational transition. The acquisition positions Bhagwan Marine to immediately scale operations and diversify revenue streams while maintaining sustainable gearing at 1.0x net debt to EBITDA.
Understanding capital-light vessel management models
Riverside operates a capital-light business model, managing and operating vessels owned by third parties rather than owning the entire fleet outright. This approach generates revenue with limited capital expenditure, supporting higher margins and attractive free cash flow profiles. Unlike traditional asset-heavy marine operators, capital-light models produce recurring revenue from multi-year contracts with tier-one customers, providing earnings visibility and reducing balance sheet risk. For investors, this structure explains Riverside’s ~40% EBITDA margin and strong cash generation characteristics.
Riverside’s five-brand portfolio delivers diversified revenue streams
Riverside manages approximately 30 vessels, including 9 owned vessels, across five established brands. The portfolio provides diversification across industrial resources, scientific research, transport, and construction sand markets.
| Brand | Service | Key Asset | Contract Tenure | FY26F EBITDA Contribution |
|---|---|---|---|---|
| Rivtow Marine | Harbour and towage services | 21 tugs (93-100% utilisation) | 11+ years Pilbara, 9+ years Mackay | ~28% |
| AIMS Vessel Management | Research vessel operations | 2 research vessels | 27+ years with AIMS | ~39% |
| Riverside Industrial Sands | Construction sand dredging | 1.6 million tonnes available | 8-10 years average | ~22% |
| Magnetic Island Ferries | Vehicle ferry services | 3 roll-on roll-off ferries | 30+ years, 20-year ramp leases | ~3% |
| Riverside Oceanic | Charter vessels for research and defence | 3 versatile vessels | Varies by project | ~7% |
Rivtow Marine provides essential harbour and towage services for tier-one resources customers in the Pilbara and Mackay regions, operating 21 tugs with utilisation rates of 93% in the Pilbara and 100% at Mackay. The brand supports the world’s largest mining company and Australia’s largest producer of seaborne metallurgical coal.
AIMS Vessel Management operates research vessels under long-term government contracts, supporting the Australian Institute of Marine Science for over 27 years. The two vessels conduct approximately 26 expeditions and 220 sea days per year, primarily in Northern Australia and the Great Barrier Reef.
Riverside Industrial Sands is the largest construction sand provider within 30km of Brisbane’s CBD, with 1.6 million tonnes available for dredging. The business operates two purpose-built dredging vessels supported by a strategically located shoreside facility.
Magnetic Island Ferries operates as the sole vehicle ferry operator to Magnetic Island, holding exclusive 20-year ramp leases for both Geoffrey Bay and Nelly Bay. The service transports approximately 7,000 vehicles per month alongside 4,500 walk-on passengers.
Riverside Oceanic supplies charter vessels for hydrography, marine research, and defence support, operating three vessels acquired between 2021 and 2024 across Northern Australia.
Approximately 70% of Riverside’s FY26F EBITDA contribution derives from owned vessels, with the remaining 30% from managed vessels. This diversification reduces single-customer concentration risk while maintaining high-quality earnings.
Pro forma financials show significant earnings uplift
The Bhagwan Marine Riverside acquisition delivers immediate earnings accretion and margin expansion, with pro forma FY26 financials combining Bhagwan’s FY25 audited results with Riverside’s FY26 forecast performance.
Pro forma FY26 revenue is expected to reach $346.3 million (Bhagwan $283.0 million plus Riverside $63.3 million). Pro forma EBITDA is forecast at $77.2 million (Bhagwan $50.9 million plus Riverside $26.2 million), representing a 54% increase. Pro forma EBIT is projected at $40.0 million (Bhagwan $22.8 million plus Riverside $17.2 million), delivering a 75% uplift.
The transaction drives substantial margin expansion, with EBITDA margin increasing from 18% to 24% and EBIT margin rising from 8% to 12%. EPS accretion is approximately 14% at the expected Riverside EBITDA scenario of $26.2 million, while return on equity accretion exceeds 20%. Pro forma gearing remains conservative at 1.0x net debt to EBITDA.
Transaction metrics and scenario analysis
The acquisition is structured with flexible earnout provisions that provide upside alignment without upfront risk. At $25.2 million Riverside EBITDA, the transaction multiple is 4.7x EBITDA with 12% EPS accretion and no earnout triggered. At the expected $26.2 million EBITDA scenario, the multiple is 4.8x EBITDA or 7.3x EBIT, with 14% EPS accretion and a $5 million earnout. At the $27.2 million EBITDA cap, the multiple remains 4.8x EBITDA with 17% EPS accretion and the full $10 million earnout paid.
Placement details and shareholder structure post-completion
Bhagwan Marine is raising $30 million through a two-tranche institutional placement. Tranche 1 will raise approximately $16.4 million via the issue of 40.0 million new shares within existing placement capacity under ASX Listing Rule 7.1. Tranche 2 will raise $13.6 million via the issue of 33.2 million new shares, subject to shareholder approval at an extraordinary general meeting scheduled for late March 2026.
The offer price is $0.41 per share, representing an 8.9% discount to the last traded price of $0.450 on 4 February 2026, a 10.4% discount to the 5-day VWAP of $0.457, and a 13.1% discount to the 15-day VWAP of $0.472.
Bhagwan directors intend to participate in the placement for approximately $3.7 million, subject to shareholder approval at the EGM. In addition, the company will issue $20 million in vendor shares to the Campbell family at the offer price (being 48.8 million shares), subject to shareholder approval. These vendor shares will be 50% escrowed for one year and 50% escrowed for two years.
Post-transaction, shares on issue will increase from 275.2 million to 397.2 million, with pro forma market capitalisation of $162.8 million and pro forma enterprise value of $233.8 million. The Kannikoski family’s shareholding will decrease from 40.8% to 30.1%, while the Campbell family will hold 13.2% of the enlarged capital structure.
Loui Kannikoski, Managing Director & CEO
“The transaction is a strong strategic and cultural fit. It reinforces our commitment to long-term shareholder value through higher returns on assets and strong free cash flow. We’re excited by the Company’s future growth opportunities and warmly welcome the Campbell Family and the Riverside team to Bhagwan.”
Growth opportunities post-acquisition
The Bhagwan Marine Riverside acquisition creates multiple organic growth avenues across the combined business. Rivtow Marine can leverage the combined vessel management expertise to manage additional commodity volumes and win new contracts. AIMS Vessel Management is positioned to benefit from increasing demand for marine research. Riverside Industrial Sands plans to transition to 24-hour dredging operations, with construction demand boosted by the 2032 Brisbane Olympics. Magnetic Island Ferries has expansion opportunities supported by additional accommodation developments and tourism growth. Riverside Oceanic can increase utilisation of recently acquired vessels and potentially cross-deploy assets with Bhagwan’s existing operations.
The transaction increases repeatable revenue from approximately 40% to approximately 50% of group revenue, strengthening earnings visibility and cash flow predictability.
What this means for Bhagwan shareholders
The Bhagwan Marine Riverside acquisition represents a step-change transaction that delivers immediate EPS accretion, margin expansion, and diversification. The deal provides complementary services, geographic expansion across North Queensland, Mackay, and Port Hedland, and commodity diversification across iron ore, metallurgical coal, and industrial sand. The capital-light business model generates high free cash flow with sustaining capex of only 30% to 35% of EBITDA, supporting strong returns on assets.
Tranche 1 of the placement is expected to settle on 16 February 2026, with the EGM scheduled for late March 2026 and transaction completion expected on or about 31 March 2026. The acquisition positions Bhagwan as a diversified marine solutions provider serving tier-one customers across multiple end markets, with enhanced scale and financial performance.
Ready to Explore How This Acquisition Could Reshape Bhagwan Marine’s Future?
The $120 million Riverside acquisition positions Bhagwan Marine as a diversified marine solutions provider with immediate earnings accretion and margin expansion across multiple industrial sectors. This transformational deal combines capital-light vessel management with long-term tier-one contracts, creating sustainable cash flow and strengthened earnings visibility.
To access detailed project updates, financial forecasts, and management commentary on this strategic expansion, visit the Bhagwan Marine investor centre. Stay informed on how the combined business plans to leverage organic growth opportunities across harbour services, research operations, and construction sand markets through 2026 and beyond.