Editor’s Synopsis:
• APSEZ to acquire controlling stake of 58.1% in Gangavaram Port Ltd (GPL) from DVS Raju and family for Rs. 3,604 Cr taking its stake in GPL to 89.6%
• GPL, with its strategic location and strong hinterland has a potential to become a 250 MMT port
• GPL will benefit from APSEZ’s platform to improve market share, enhance cargo and improve operating efficiencies
• APSEZ through its 2 AP ports (Krishnapatnam & Gangavaram) will be able to offer enhanced solutions to its customers
• This acquisition continues the strategy of APSEZ to transform into a pan India cargo utility from a predominantly west coast port company
Ahmedabad, India; 23 March 2021; The Adani Ports and Special Economic Zone (APSEZ) Ltd., India’s largest private Ports & Logistics company and the flagship transportation arm of the diversified Adani Group, is acquiring the 58.1% stake held by DVS Raju and family in Gangavaram Port Limited (GPL). The acquisition is valued at Rs. 3,604 Cr and subject to regulatory approvals. APSEZ had announced acquisition of Warburg Pincus’s 31.5% stake in GPL on March 3, 2021 and together with this acquisition, APSEZ would have 89.6% stake in GPL.
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 MMT capacity established under concession from Government of Andhra Pradesh (GoAP) that extends till 2059. It is an all-weather, deep water, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT. Currently, GPL operates 9 berths and has free hold land of ~1,800 acres. With a master plan capacity for 250 MMTPA 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, southern and central India.
GPL will benefit from APSEZ’s pan-India footprint, logistics integration, customer centric philosophy, operational efficiencies and strong balance sheet to deliver a combination of high growth by enhancing market share and add additional cargo types and improved margins and returns.
In FY20, GPL had a cargo volume of 34.5 MMT, revenue of Rs. 1,082 Cr, EBITDA of Rs. 634 Cr (59% margin) and PAT of Rs. 516 Cr GPL is debt free with a cash balance of over Rs. 500 Cr
The Company has a paid up share capital of 51.7 Cr shares of which 58.1% is owned by DVS Raju and Family (Promoter), 10.4% by Government of Andhra Pradesh and 31.5% by Warburg Pincus.
APSEZ announced acquisition of 31.5% stake of Warburg Pincus on March 3, 2021 for Rs. 120/share and shall acquire the DVS Raju stake of ~30 Cr shares (58.1%) also at Rs. 120/share which works out to a consideration of Rs. 3,604 Cr The transaction implies EV/EBITDA multiple of 8.9x and P/E multiple of 12.0x (based on FY20 figures) and is a value accretive transaction for APSEZ shareholders.
Mr. Karan Adani, CEO and Whole Time Director of APSEZ said, “The acquisition of GPL is a further augmentation of our vision of capitalizing on an expanded logistics network effect that generates greater value as it expands. Every additional node that we are able to add to our network allows us to deliver a greater level of integrated and enhanced solutions to our customers. In this context, GPL is a tremendous addition to our portfolio. 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 MMT port. This will undoubtedly help accelerate the industrialization of AP. The Raju family has built a great port and we will continue to expand the world class asset that has been initiated by them.”