Adani Ports to acquire controlling interest of 58.1 pc in Gangavaram Port from DVS Raju family for Rs 3,604 Cr

Ahmedabad (Gujarat) [India], March 23 : The Adani Ports and Special Economic Zone (APSEZ) Ltd., India's largest private ports and logistics company and flagship transportation arm of the diversified Adani group, is acquiring the 58.1 per cent stake held by DVS Raju and family in Gangavaram Port Limited (GPL). The acquisition is valued at Rs 3,604 crore and subject to regulatory approvals.
APSEZ had announced the acquisition of Warburg Pincus's 31.5 per cent stake in GPL on March 3, 2021 and together with this acquisition, APSEZ would have an 89.6 per cent stake in GPL.
"Ports play a major role in shaping the future. Through APSEZ's 89.6 per cent stake in Gangavaram port, the Adani Group will greatly expand its pan-India cargo presence. As India's largest private sector port developer and operator, we will accelerate India's and AP's industrialization," tweeted Gautam Adani, chairman and founder of the Adani Group.
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 the potential to become a 250 MMT port. This will undoubtedly help accelerate the industrialization of Andhra Pradesh. The Raju family has built a great port and we will continue to expand the world-class asset that has been initiated by them," he added.
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 a concession from the Government of Andhra Pradesh 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 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, a statement said.
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, it added.
GPL will benefit from APSEZ's pan-India footprint, logistics integration, a 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, it said.
In FY20, GPL had a cargo volume of 34.5 MMT, a revenue of Rs 1,082 crore, EBITDA of Rs 634 crore (59 per cent margin) and PAT of Rs 516 crore GPL is debt-free with a cash balance of over Rs 500 crore.
The Company has a paid-up share capital of 51.7 crore shares of which 58.1 per cent is owned by DVS Raju and Family (Promoter), 10.4 per cent by the Government of Andhra Pradesh and 31.5 per cent by Warburg Pincus.
APSEZ announced the acquisition of a 31.5 per cent stake of Warburg Pincus on March 3, 2021 for Rs 120/share and shall acquire the DVS Raju stake of 30 crore shares (58.1 per cent) also at Rs 120/share which works out to a consideration of Rs 3,604 crore. 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.