Adani Ports receives NCLT approval to acquire 58.1% in Gangavaram Port

Deal to be a share swap, with issuance of 47.7 million APSEZ shares to the erstwhile GPL promoters; post-transaction, GPL will become a fully-owned subsidiary of APSEZ

Adani Ports and Special Economic Zone Ltd (APSEZ) has received approvals from the National Company Law Tribunals at Ahmedabad and Hyderabad for acquiring 58.1 per cent stake in Gangavaram Port Ltd (GPL) through the composite scheme of arrangement. With this stake purchase, GPL will become a fully-owned subsidiary of APSEZ.

The acquisition of the stake from D V S Raju and family will be a share swap, with 47.7 million APSEZ shares being issued to the erstwhile GPL promoters. The acquisition of GPL is priced at around Rs 6,200 crore (517 million shares at Rs 120 each).

“The transaction implies an EV/EBITDA multiple of around 7.8x (FY22 EBITDA of Rs 796 crore), which is value accretive to APSEZ shareholders from day one itself,” said a statement by APSEZ. APSEZ has already acquired 31.5 per cent in the firm from Warburg Pincus and another 10.4 per cent from the Andhra Pradesh government in FY22.

In FY2022, the port handled 30 million metric tonnes of cargo, earned a revenue of Rs 1,206 crore and an EBITDA of Rs 796 crore, at a margin of 66 per cent. GPL is debt-free, with a cash balance of Rs 1,293 crore as of March 2022-end.

“The acquisition of GPL is a key milestone in consolidating our position as India’s largest transport utility and in achieving East Coast and West Coast parity. Gangavaram Port has excellent rail and road network connectivity and is the business gateway to a hinterland spread over eight states. The recent addition of a container handling terminal will help us accelerate growth of cargo volumes,” said Karan Adani, CEO and whole-time director, APSEZ.

“APSEZ also brings world-class logistics synergies to the table, which will propel Gangavaram Port to a potential cargo volume of 250 MMT. This will boost the pace of Andhra Pradesh's industrialisation,” Adani added.

Gangavaram Port is located in the northern part of Andhra Pradesh, next to Vizag Port. It is the third largest non-major port in Andhra Pradesh with 64 MMT capacity established under concession from the Andhra government 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 (dead weight). Currently it operates nine berths and has freehold land of 1,800 acres.

The port handles a diverse mix of dry and bulk commodities such as coal, iron ore, fertiliser, limestone, sugar, bauxite, alumina, and steel. “Gangavaram Port is the gateway port for a hinterland spread over eight 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 high growth by enhancing market share, and add additional cargo types and improved margins and returns,” the statement added.