Krishnapatnam Port in talks with equity partner 3i for exit

The Krishnapatnam Port is in discussions with the 3i Group to offer the England-based private equity fund an exit from the eight-year-old investment it's saddled with, a top official has said.
Even as there are reports of the East Coast facing an excess capacity problem, the port is looking at investing to add capacities in emerging areas like liquefied natural gas and RO-RO for the car manufacturers, the port official said.
"Our management is talking to them (3i Group). Basically, exit discussions are happening. They are short-term investors, and want to exit and so discussions are happening on that front," Krishnapatnam Port chief executive Anil Yendluri told PTI recently.

He said 3i, which invested USD 161 million in 2009, holds 8-9 per cent stake in the port, but declined to spell out the exact route which will serve as an exit for the fund.
Asked about the chances of an initial public offer, especially as the capital markets is hot, he said there is no plan of adopting this route which generally serves as a good platform for investors to exit.
A July 2014 media report had quoted sources saying that 3i was planning to approach the CVR Group, the promoters of the port to the Company Law Board which is now National Company Law Tribunal for allegedly refusing to stick to an agreement signed in 2009 for buying back the stake.

Another media report earlier this year had said the promoters were looking to raise structured debt for a potential buyout of the 3i stake.

However, Yendluri declined to comment on any specifics of a possible deal with 3i.
When asked about the excess supply on the East Coast, he said it is a temporary problem but will also make any investor a "little cautious".
The port will be closing this year with a capacity of 42 million tonne and does not have any plans of adding more capacities further, he said, adding new capacity addition has already plateaued.
It will, however, consider installing capacities in newer areas like a Ro-Ro berth which is essential for sending out cars and also liquid fuels like LNG and LPG, he said.

Yendluri, however, did not divulge any firm plan on any of these brownfield expansion activities, saying it depends on client requirements. "We are at 11 berths now. We'll add berths only as per the requirements."
The port is more bullish on container side and expects to double cargo handling to 5 lakh standard units this year on an installed capacity of 1.2 million TEUs, he said, adding the port will wait for capacity utilisation to touch 60-70 per cent before adding new capacities.