The Hindu Business Line : Ports seem to have finally docked on the Indian bourses

The IPO of the Adani group-promoted Mundra Port and SEZ Ltd (MPSEZL), the first by any Indian port, got subscribed by 116 times, indicating investor’s confidence in the ports sector. The issue opened on November 1 and closed on Wednesday. The issue has received investment commitments to the tune of Rs 2,00,000 crore.

While the subscription from the qualified institutional buyer (QIB) and high networth individuals (HNI) segments were 159 times and 156 times respectively, that from the retail investors was seen to be 13 times.

Price band

The company, through the IPO, is seeking to raise up to Rs 1,771 crore for development of its infrastructural facilities at Mundra and Dahej. The price band had been fixed at Rs 400-440 per equity share. The issue comprises a net issue of 4.01 crore equity shares to the public and a reservation of 1.5 lakh shares for eligible employees. The issue and the net issue will constitute 10.05 per cent and 10.01 per cent respectively of fully-diluted post issue paid-up capital of the company.

Capt. Sandeep Mehta, CEO of the company, told Business Line that the “overwhelming response” indicated investors confidence in the port and infrastructure sector.

The company was started by the first generation entrepreneur Mr Gautam Adani who started off as a trader. Being in the export import business, he decided to set up a small captive port in 1998. Subsequently, he got the Gujarat Maritime Board’s approval to set up a full-fledged port. Today the port handles about 20 million tonnes (mt) of traffic and has a single buoy mooring and container terminal, which has been sub-licenced to an international port operator.

Expansion

The company plans to utilise the proceeds of the issue to expand its infrastructure base, which include a 30 million-tonne capacity coal terminal that will handle coal for Tata Power and Adani power. Part of the proceeds will also be used to set up SEZs and expand the facilities of Adani Logistics, which is entering into the container train operating business. The port has plans to increase its traffic handling capacity from 20 mt to 50 mt by 2010.

“The IPO is attracting a lot of interest owing to its strategic location and proximity to the NCR region, which accounts for the maximum exim trade of the country. This will ensure that there will be a steady flow of traffic to the Mundra port. The proposed SEZ will be a value creator for the company, as it has a significant land bank,” said Mr Amit Adesara, Research Analyst, Emkay Share and Stock Brokers.