Road to insolvency resolution: KKR, Blackstone, Aion Capital eye Dighi Port

Among the 10 entities that have expressed interest in Dighi Port, KKR, Blackstone and Aion Capital are the three private equity (PE) firms that have bid in partnership with global port players. Dighi was the first port to land up in the National Companies Law Tribunal under the insolvency law.

“The bid condition stated that parties should have prior experience in the sector. The three PE players are just sleeping partners of the consortiums. One of the PE firms is bidding with Euroports,” a source from one of the bidding companies told Business Standard. 

Euroports is one of the largest and most diversified port operators in Europe and is into terminals, transport, freight and contract logistics. 

“The PE players have bid very aggressively this time. Their bid prices are 42-48 per cent higher compared with those by ours — the core industry port players,” the source said.

Indian ports, such as the Karaikal and the Krishnapatnam, have seen investments from PE players during FY07-FY09. Overall, participation of PE firms in India's port sector has remained minimal. In the past, PE funds such as Ascent Capital Advisors, Standard Chartered Private Equity and 3i Group, were present in India's port sector. Their exits took place between FY15 and FY16. 

"With an expected port traffic growth of 3-5 per cent over the next five years in the country, the scope for participation by PE players is very limited," said Hetal Gandhi, director at CRISIL Research. "However, port specific dynamics such as region, commodity mix, traffic demand, among others, determine the prospects of PE investments."
 

Sanjana Jindal-led JSW Infrastructure, Gautam Adani-led Adani Ports, two more overseas players along with DP World, and South Korean firm Posco with Jawaharlal Nehru Port Trust are among the 10 others bidding for Dighi Port. “The bids would be opened on October 10," another source said.

The debt on Dighi's books is nearly Rs 16 billion and Bank of India is the lead lender. Balaji Infra Projects owns 51.01 per cent in Dighi Port with Infrastructure Leasing & Financial Services (IL&FS) holding 39.37 per cent and Tara India Fund III, a special purpose vehicle, holding 5.46 per cent. IL&FS is also one of the lenders. Balaji Infra is owned by Vijay Kalantri, the chairman and managing director of Dighi Port. 

The Dighi port, located in the Raigad district of Maharashtra, is being developed by Balaji Infra under a 50-year concession agreement from the state’s maritime board. The port has 1,600 acres of land and an oil tank farm facility. Dabhol apart, it is the only port in Maharashtra with permissions in place for setting up a liquefied natural gas terminal. 

Dighi got a ‘default’ rank from CARE Ratings in April last year. This port has seen only 2 million tonnes of capacity being utilised, of the 30 mt installed. 

Dighi, being part of the Delhi-Mumbai Industrial Corridor and National Investment & Manufacturing Zone, is considered an attractive investment opportunity. Steel coil, cement, fertiliser, bauxite and coal are the cargo mix handled there. There is potential for hinterland connectivity with the automobiles, chemical, sugar and food processing industries nearby. However, poor road connectivity is the main reason why the port's utilisation has not picked up over past eight years, sources said.