Adani Ports and Special Economic Zone (APSEZ) rose 2.05% to Rs 744.50 after the company said that it is acquiring the 31.5% stake held by Windy Lakeside Investment (an affiliate of Warburg Pincus) in Gangavaram Port (GPL).
"The acquisition is valued at Rs 1,954 crore and subject to regulatory approvals," the company said in a statement. The acquisition will expand APSEZ's market share to 30% across 12 locations in India.
GPL is located in the northern part of Andhra Pradesh next to Vizag Port. It is the second largest non-major port in Andhra Pradesh with a 64 MMT capacity established under concession from Government of Andhra Pradesh (GoAP) that extends till 2059. It is an all-weather, deep water, multi-purpose port capable of handling fully laden super cape size vessels of upto 200,000 DWT.
Currently, GPL operates 9 berths and has free hold land of approximately 1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL has sufficient headroom to support future growth.
GPL handles a diverse mix of dry and bulk commodities including coal, iron ore, fertilizer, limestone, bauxite, sugar, alumina, and steel. GPL is the gateway port for a hinterland spread over 8 states across eastern, western, southern and central India.
In FY20, GPL had a cargo volume of 34.5 MMT, generated revenue of Rs 1,082 crore, EBITDA of Rs 634 crore (margin of 59%) and PAT of Rs 516 crore. GPL is debt free with cash balance of over Rs 500 crore. It has a paid-up equity share capital of 51.7 crore shares of which 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 acquiring the Warburg Pincus stake of approximately 16.3 crore shares (31.5%) at Rs 120 per share which works out to a consideration of Rs 1,954 crore. The transaction implies EV/EBITDA multiple of 8.9x and P/E multiple of 12x (based on FY20 figures). APSEZ is also in discussions with DVS Raju & Family for their 58.1% stake (approximately 30 crore shares) in GPL.
Karan Adani, CEO and whole-time director of APSEZ said, "The acquisition of GPL is a part of our continued strategy to build out a port and logistics network that is unmatched in its ability to serve customers 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 believe that GPL holds great potential to complement its bulk cargo terminals with new cargo categories that we intend to develop. The port provides us great access to an adjacent hinterland that was largely untapped by APSEZ thereby placing us in a position to serve a broader set of port customers as well as expand our overall hinterland logistics footprint for a much larger base of customers."
APSEZ, a part of globally diversified Adani Group, is the largest port developer and operator in India. On a consolidated basis, the company posted a 16.23% increase in net profit to Rs 1576.53 crore on 11.59% rise in total income to Rs 4274.49 crore in Q3 FY21 over Q3 FY20.
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