Adani Ports to acquire 31.5% in Gangavaram Port from Warburg Pincus for Rs 1,954 crore

The Adani Ports and Special Economic Zone (APSEZ) Ltd on Wednesday said that it is acquiring the 31.5 per cent stake held by Windy Lakeside Investment Limited (an affiliate of Warburg Pincus) in Gangavaram Port Limited (GPL). The acquisition is valued at Rs 1,954 crore and subject to regulatory approvals.

APSEZ Ltd is India's largest private Ports & Logistics company and a key subsidiary of the diversified Adani Group and it said, the latest acquisition expands APSEZ's market share to 30 per cent 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 a concession from the Government of Andhra Pradesh (GoAP) that extends till 2059.

Mr. 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."

It is an all-weather, deep water, multi-purpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT. Currently, GPL operates 9 berths and has freehold land of 1,800 acres. With a master plan capacity of 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 per cent) and PAT of Rs 516 crore. GPL is debt-free with a cash balance of over Rs 500 crore.

The Company has a paid-up equity share capital of 51.7 Cr shares of which 58.1 per cent is owned by DVS Raju and Family (Promoter), 10.4 per cent by the Government of Andhra Pradesh and 31.5 per cent by Warburg Pincus.

APSEZ is acquiring the Warburg Pincus stake of 16.3 crore shares (31.5 per cent) at Rs 120 per share which works out to a consideration of Rs 1,954 crore. The transaction implies an EV/EBITDA multiple of 8.9x and a P/E multiple of 12.0x (based on FY20 figures). APSEZ is also in discussions with DVS Raju & Family for their 58.1 per cent stake (30 Cr shares) in GPL.