Adani Ports and Special Economic Zones (APSEZ) has announced its plan to acquire the 31.5% stake held by Windy Lakeside Investment Limited (an affiliate of Warburg Pincus) in Gangavaram Port Limited (GPL). The transaction is valued at Rs1,954cr and subject to regulatory approvals.
In Gangavaram Port, the company has a paid-up equity share capital of 51.7cr shares of which 58.1% is owned by DVS Raju and Family (Promoter). While the Government of Andhra Pradesh holds a 10.4% stake and the remaining 31.5% held by Warburg Pincus.
As per the agreement, APSEZ is acquiring the Warburg Pincus stake of 16.3cr shares (31.5%) at Rs120 per share which works out to a consideration of Rs1,954crs. The transaction implies an EV/EBITDA multiple of 8.9x and a P/E multiple of 12.0x (based on FY20 figures).
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 AP is a strategic complement to our recent acquisition of the Port of Krishnapatnam serves the south of AP. We believe that GPL holds great potential to complement its bulk cargo terminals with new cargo categories 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," Adani added.
Notably, APSEZ is also in discussions with DVS Raju & Family for their 58.1% stake (30cr shares) in GPL.
Adani said, "We are grateful to the leaders of the AP Government for their support and are committed to doing our part to support their vision of accelerating the industrialization of AP. The Raju family must be complimented for having built an absolute world-class asset that we are proud to invest in.”
Further, talking about the development, Vishal Mahadevia, Managing Director/Head of Warburg Pincus India said, "From a greenfield project at the time of investment, Gangavaram Port has developed into a world-class port. We have been very pleased with our partnership with the Raju family and the Gangavaram Port team, and look forward to the port’s continued success in partnership with the Adani Group."
Also, DVS Raju, Chairman of Gangavaram Port Limited said, "We are very proud of the remarkable success of Gangavaram Port in becoming one of India’s leading and most efficient deepwater ports with ultra-modern infrastructure. Warburg Pincus has been a supportive partner in this journey, and we look forward to the Adani Group’s contributions in the next phase of the port’s growth."
Located in the northern part of Andhra Pradesh next to Vizag Port, GPL is the a second largest non-major port in Andhra Pradesh with a 64 MMT capacity established under a concession from the Government of Andhra Pradesh (GoAP) that extends till 2059. It is all-weather, deep water, multi-purpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT.
At present, GPL operates 9 berths and has freehold land of ~1,800 acres. With a master plan capacity of 250 MMTPA with 31 berths, GPL has sufficient headroom to support future growth.
On Sensex, Adani Ports have advanced by nearly 3% after clocking an intraday high of Rs749.85 per piece in early deals. The stock continues to trade higher.
At around 10.45 am, Adani Ports perform at Rs745.50 per piece up Rs15.95 or 2.19% on Sensex.