The Adani Ports and Special Economic Zone (APSEZ) Ltd. is acquiring the 58.1 per cent stake held by D.V.S. Raju and family in the Gangavaram Port Limited (GPL).
The acquisition is valued at Rs 3,604 crore and subject to regulatory approvals. APSEZ, the transportation arm of Adani Group, had announced the acquisition of Warburg Pincus's 31.5 per cent stake in GPL on March 3 and together with this acquisition, APSEZ would have an 89.6 per cent stake in GPL.
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. It is all-weather, deep water, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT.
Currently, GPL operates nine berths and has freehold land of 1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL also has 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 eight states across eastern, southern and central India.
The acquisition will help GPL to 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 per cent margin) 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 share capital of 51.7 crore 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 announced acquisition of 31.5 per cent stake of Warburg Pincus on March 3 for Rs 120/share and shall acquire the D.V.S. Raju stake of 30 crore shares (58.1 per cent) also at Rs 120/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.
Karan Adani, CEO and Whole Time Director of APSEZ said, "The acquisition of GPL is a further augmentation of our vision of capitalising on an expanded logistics network effect that generates greater value as it expands. Every additional node that we 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 industrialisation 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, a part of the globally diversified Adani Group has evolved from a port company to Ports and Logistics Platform for India. It is the largest port developer and operator 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 and Ennore in Chennai -- represent 24 per cent of the country's total port capacity.