Adani Ports to acquire controlling interest of 58.1% in Gangavaram Port from DVS Raju Family for Rs 3,604 crore

Ahmedabad, March 23, 2021

Adani Ports and Special Economic Zone Limited (APSEZ) today said it is acquiring the 58.1 per cent stake held by D V S Raju and family in Gangaram Port Limited (GPL) for Rs 3,604 crore, subject to regulatory approvals.

APSEZ is India's largest private ports and logistics company and the flagship transportation arm of the diversified Adani Group.

APSEZ had earlier, on March 3, announced acquisition of Warburg Pincus’s 31.5% stake in GPL and together with this acquisition it would have an 89.6% stake in GPL.

GPL is located in the northern part of Andhra Pradesh next to the Visakhapatnam 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, a press release from APSEZ said.

It is an all-weather, deep water, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT. Currently, GPL operates 9 berths and has free hold land of about 1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL has sufficient headroom to support future growth, the release said.

According to it, 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 fore 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 a combination of high growth by enhancing market share and add additional cargo types and improved margins and returns.

In FY20, GPL had a cargo volume of 34.5 MMT, revenue of Rs. 1,082 crore, EBITDA of Rs. 634 crore (59% margin) and PAT of Rs. 516 core. GPL is debt free with a cash balance of more than Rs 500 crore, the release said.

The company has a paid-up 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 announced acquisition of the 31.5% stake of Warburg Pincus on March 3 Rs. 120 a share and shall acquire the DVS Raju stake of about 30 crore shares (58.1%) also at Rs. 120 a share which works out to a consideration of Rs. 3,604 crore.

"The transaction implies EV/EBITDA multiple of 8.9x and P/E multiple of 12.0x (based on FY20 figures) and is a value accretive transaction for APSEZ shareholders," the release said.

Karan Adani, CEO and Whole Time Director of APSEZ said, “The acquisition of GPL is a further augmentation of our vision of capitalizing on an expanded logistics network effect that generates greater value as it expands. Every additional node thatwe are able to add to our network allows us to deliver a greater level of integrated and enhanced solutions to our customers. In this context, GPL is a tremendous addition to our portfolio. The associated hinterland we will now be able to tap into is one of the fastest growing in the eastern region and with the logistic synergies APSEZ brings to the table, GPL has a potential to become a 250 MMT port. This will undoubtedly help accelerate the industrialization of AP. The Raju family has built a great port and we will continue to expand the world class asset that has been initiated by them.”

APSEZ is the largest port developer and oeprator in India with 12 strategically located ports and terminals — Mundra, Dahej, Tuna and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Visakhapatnam and Krishnapatnam in Andhra Pradesh, Dighi in Maharashtra and Kattupalli & Ennore in Chennai— represent 24% of the country's total port capacity, handling vast amounts of cargo from both coastal areas and the vast hinterland.

The company is also developing a transhipment port at Vizhinjam, Kerala.

NNN