India’s largest private port operator Adani Ports and Special Economic Zones (APSEZ) Ltd. has announced that it is acquiring the 31.5% in Gangavaram Port Ltd (GPL), near Visakhapatnam, currently held by private equity investor Warburg Pincus. The acquisition is valued at ₹1,954 crore and subject to regulatory approvals. Adani intends to follow this up by the remaining shares in the port from the promoter family soon.
GPL is located in the northern part of Andhra Pradesh next to Vizag Port. It is the second largest non major port in Andhra Pradesh with a 64 million tonne per annum (mtpa) capacity established under concession from Government of Andhra Pradesh that extends till 2059. It is an all-weather, deep water, multi-purupose port capable of handling fully laden super cape size vessels of upto 200,000 deadweight tonnage. Currently, GPL operates nine berths and has free hold land of about1,800 acres. With a master plan capacity for 250 mtpa with 31 berths, GPL has sufficient headroom to support future growth.
GPL handles a diverse mix of dry and bulk commodities including coal, iron ore, fertilizer, limestone, bauxite, sugar, alumina, and steel. GPL is the gateway port for a hinterland spread over 8 states across eastern, western, southern and central India.
In FY20, GPL had a cargo volume of 34.5 million tonnes, generated revenue of ₹1,082 crore, operating revenue of ₹634 crore (margin of 59%) and net profit of ₹516 crore. GPL is debt-free with cash balance of over ₹500 crore.
The company has a paid up equity share capital of 51.7 crore shares of which 58.1% is owned by DVS Raju and Family, 10.4% by Government of Andhra Pradesh and 31.5% by Warburg Pincus.
APSEZ is acquiring the Warburg Pincus stake of roughly16.3 crore shares (31.5%) at ₹120 a share which works out to a consideration of Rs1,954 crore. The transaction implies EV/EBITDA multiple of 8.9 and price to equity ratio of 12. APSEZ is also in discussions with DVS Raju & Family for their 58.1% stake (roughly 30 crore shares) in GPL.
Karan Adani, CEO and Whole Time Director of APSEZ said, “The acquisition of GPL is a part of our continued strategy to build out a port and logistics network that is unmatched in its ability to serve customers across the nation. The location of GPL in the north of Andhra Pradesh is a strategic complement to our recent acquisition of the Port of Krishnapatnam that serves the south of Andhra Pradesh. We believe that GPL holds great potential to complement its bulk cargo terminals with new cargo catagories that we intend to develop. The port provides us great access to an adjacent hinterland that was largely untapped by APSEZ thereby placing us in a position to serve a broader set of port customers as well as expand our overall hinterland logistics footprint for a much larger base of customers.”
“From a green field project at the time of investment, Gangavaram Port has developed into a world class port,” Vishal Mahadevia, Managing Director / Head of Warburg Pincus India, said in the press release.
APSEZ is the largest port developer and operator in India with 12 strategically located ports and terminals — Mundra, Dahej, Tuna and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Visakhapatnam and Krishnapatnam in Andhra Pradesh, and Kattupalli and Ennore in Chennai— represent 24% of the country’s total port capacity, handling vast amounts of cargo from both coastal areas and the vast hinterland. The company is also developing a transhipment port at Vizhinjam, Kerala.
