Adani Ports to acquire 31.5% in Gangavaram Port from Warburg Pincus for Rs. 1,954 Cr

Adani Ports to acquire 31.5% in Gangavaram Port from Warburg Pincus for Rs. 1,954 Cr

The Adani Ports and Special Economic Zones (APSEZ) Ltd., India's largest private Ports & Logistics company and a key subsidiary of the diversified Adani Group, is acquiring the 31.5% stake held by Windy Lakeside Investment Limited (an affiliate of Warburg Pincus) in Gangavaram Port Limited (GPL). The acquisition is valued at Rs. 1,954 Cr and subject to regulatory approvals.

GPL is located in the northern part of Andhra Pradesh next to Vizag Port. It's the second largest non significant jack in Andhra Pradesh with a 64 MMT capacity established under concession by Government of Andhra Pradesh (GoAP) that extends until 2059. It's an all weather, deep water, multi-purupose port capable of managing fully laden super cape size vessels of upto 200,000 DWT. Presently, GPL operates 9 berths and has free hold property of 1,800 acres. With a master plan capacity for 250 MMTPA using 31 berths, GPL has enough headroom to support future expansion.

GPL handles a varied mix of heavy and bulk commodities including Coal, Iron Ore, Fertilizer, Limestone, Bauxite, Sugar, Alumina, and Steel. GPL is the gateway port to get a hinterland disperse over 8 countries across southern, southern, western and central India.

In FY20, GPL needed a freight volume of 34.5 MMT, generated revenue of INR 1,082 Crs, EBITDA of INR 634 Crs (margin of 59%) and PAT of INR 516 Crs.

The business has a paid up equity share capital of 51.7 Cr shares of that 58.1% is owned by DVS Raju and Family (Promoter), 10.4% by Government of Andhra Pradesh and 31.5% by Warburg Pincus.

APSEZ is getting the Warburg Pincus bet of ~16.3 Cr shares (31.5percent ) in INR 120/ share which works out to some consideration of INR 1,954 Crs. The trade implies EV/EBITDA several of 8.9x and P/E several of 12.0x (based on FY20 figures). APSEZ can be in talks with DVS Raju & Family for their 58.1% stake (~30 Cr stocks ) in GPL.

Mr. Karan Adani, CEO and Whole Time Director of APSEZ stated,"The purchase of GPL is a part of our continued strategy to develop a port and logistics community that is unmatched in its ability to serve clients 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 that serves the south of AP. We feel that GPL holds excellent potential to complement its bulk freight terminals with fresh cargo catagories that we intend to develop. The port provides us excellent access to an adjacent hinterland that was largely untapped by APSEZ thereby placing us in a position to serve a broader set of vent clients as well as expand our general hinterland logistics footprint for a much larger base of consumers. We are grateful to the leaders of the AP Government for their support and are committed to doing our part to encourage their vision of accelerating the industrialization of AP. The Raju family has to be complimented for having built an absolute world class asset that we are proud to invest in."

"From a green field project at the time of investment, Gangavaram Port has grown into a world class interface. We've been very pleased with our partnership with the Raju family and the Gangavaram Port staff, and look forward to the port's ongoing success in partnership with the Adani Group," said Vishal Mahadevia, Managing Director / Head of Warburg Pincus India.

"We are extremely proud of the remarkable success of Gangavaram Port in getting one of India's leading and most efficient deep water ports with ultra modern infrastructure. Warburg Pincus has been a supportive partner in this trip, and we look forward into the Adani Group's contributions within the next phase of the port's expansion," said Mr. DVS Raju, Chairman of Gangavaram Port Limited.