Adani Ports to acquire 75% stake in Krishnapatnam Port for Rs 13,572 cr

Company could now set eyes on NCLT-listed Dighi Port, say analysts

Adani Ports and Special Economic Zone (APSEZ), one of the country’s largest private port operators, on Friday announced acquisition of 75 per cent stake in Andhra Pradesh-based Krishnapatnam Port Company for an enterprise value of Rs 13,572 crore.
 
The proposed acquisition is the largest by APSEZ so far and would be funded through internal accruals and existing cash balance, the Gautam Adani-led company said in an exchange filing.
 
“This acquisition would accelerate our stride towards FY25 vision of handling 400 million tonnes (mt) cargo. Given the best-in-class infrastructure and the distinct hinterland catered by Krishnapatnam Port, this acquisition will increase our market share to 27 per cent (from current 22 per cent),” Karan Adani, chief executive officer of APSEZ, was quoted as saying.
 
Since the acquisition is subject to regulatory approvals, the transaction is expected to be completed in 120 days, said the exchange filing.
 
The credit metrics of APSEZ consolidated are not expected to change with this transaction and the net debt/Ebitda, including Krishnapatnam Port, in FY21 is seen at around 3.2x, which is in line with the pre-acquisition of net debt/Ebitda of 3.1x in FY19, the company said.

As of March 31, 2019, debt at Krishnapatnam Port stood at Rs 6,000 core. CVR Group-promoted Krishnapatnam Port is a multi-cargo facility, which handled 54 mt in FY19. 
 
“We expect the port to grow to 100 mt in around seven years and expect the Ebitda to double in around 4 years,” said the company.
 
With this acquisition, the company has strengthened its position on the east coast of India. Adani Ports is operating Ennore and Kattupalli (Tamil Nadu), Vizag (Andhra Pradesh), and Dhamra (Odisha) ports and terminals on the east coast. Making it clear that its capacity enhancement plans over the next few years would also include inorganic growth route, Adani Ports’ net debt/Ebitda has been on a roller-coaster ride in the past few years, though it is at a comfortable position at present, keeping enough room for more deals. 
 

Last week, Adani Ports forayed into cold chain logistics via acquisition of 40.25 per cent stake in Snowman Logistics from promoter Gateway Distriparks. It was Adani Ports’ logistics arm Adani Logistics that did the stake buy.  After this acquisition, brokerages are of the view that the company would set its eyes on the National Company Law Tribunal- (NCLT-) listed Dighi port, which will give Adani Group the presence in Maharashtra.
 
“Dighi looks like Adani Ports’ next acquisition as it will give it presence in Maharashtra,” said a Mumbai-based analyst on the condition of anonymity.