Adani Ports and Special Economic Zone Ltd (APSEZ) on Tuesday said it had acquired the 58.1% stake held by D V S Raju and family, the promoters of Gangavaram Port Ltd, for ₹3,604 crore, making it the most expensive by equity value of the five ports the Ahmedabad-based infrastructure conglomerate has purchased since 2014.
BusinessLine was the first to report the deal last week.
Raju and family-owned 30 crore shares in Gangavaram Port Ltd (GPL), and the deal was finalised at ₹120 a share.
On March 3, India’s biggest private port operator had purchased a 31.5% stake held by Windy Lakeside Investment Limited (an affiliate of private equity firm Warburg Pincus LLC) in Gangavaram Port, also at ₹120 a share for ₹1,954 crore.
The transaction implies EV/EBITDA multiple of 8.9 times and P/E multiple of 12 times (based on FY20 figures), valuing Gangavaram Port’s equity at ₹6,204 crore, including the 10.4% stake held by the Andhra Pradesh government.
For buying the 89.6% stake in Gangavaram Port, APSEZ cumulatively paid ₹5,558 crore.
This is much higher than the ₹4,500 crore equity valuation for Krishnapatnam Port Co Ltd, for which APSEZ paid ₹3,395 crores for a 75 per cent stake.
The Krishnapatnam deal was closed in October last year at an enterprise value of ₹12,000 crore, including debt of ₹7,500 crore and equity of ₹4,500 crore.
In 2014, APSEZ acquired Dhamra Port Co Ltd for an enterprise value of ₹5,500 crore from Tata Steel Ltd and Larsen and Toubro Ltd.
In June 2018, APSEZ acquired Kattupalli port from Larsen & Toubro Ltd for ₹1,950 crore.
In February, APSEZ said it had completed Dighi Port Ltd’s acquisition, located close to state-owned Jawaharlal Nehru Port Trust (JNPT), for Rs705 crore under India’s bankruptcy law. This was the lowest it paid for acquiring a port.
All the five port acquisitions have been struck at very reasonable valuations, of which APSEZ paid the most for Gangavaram in terms of equity.
The Gangavaram deal helps APSEZ expand its market share to 30% across 12 locations.
Gangavaram Port Ltd, the entity that runs Gangavaram port, was awarded the rights by the Andhra Pradesh government to develop and operate the port for an initial period of 30 years beginning 2009 and extendable by two terms of ten years each till 2059.
GPL is contractually mandated to share 2.1% of its annual gross revenue with the A P government till 2039, 4.2% from 2039 till 2049 and 8.4% between 2049 and 2059.
Gangavaram is deep water, multi-purpose port capable of handling fully laden super Capesize vessels of up to 200,000 tonnes. Currently, GPL operates nine berths and has freehold land of about 1,800 acres. With a master plan capacity of 250 mt with 31 berths, GPL has sufficient headroom to support future growth.
GPL is the gateway port for a hinterland spread over eight states across eastern, western, southern and central India.
“The associated hinterland we will now be able to tap into is one of the fastest-growing in the eastern region, and with the logistic synergies APSEZ brings to the table, GPL has a potential to become a 250 million tonne (mt) port. This will undoubtedly help accelerate the industrialisation of Andhra Pradesh,” Karan Adani, Karan Adani, CEO and whole-time director of APSEZ said.