Adani Ports and Special Economic Zone Ltd (APSEZ) has received approvals from NCLT Ahmedabad and NCLT Hyderabad for acquiring the remaining 58.1 per cent stake in Gangavaram Port Ltd (GPL) through the composite scheme of arrangement. This makes GPL 100 per cent subsidiary of APSEZ.

The acquisition of GPL is priced at around ₹6,200 crore (517mn shares @ ₹120/share).

Notably, APSEZ has already acquired 31.5% stake in the company from Warburg Pincus and another 10.4 per cent from the Andhra Pradesh Government during FY22.

Value accretive to shareholders

The acquisition of remaining 58.1% stake from DVS Raju and family will be through a share swap arrangement and will result in issuance of around 47.7m APSEZ shares to the erstwhile GPL promoters. The transaction implies an EV/EBITDA multiple of around 7.8x (FY22 EBITDA of ₹796 crore), which is value accretive to APSEZ shareholders from day one itself, APSEZ said in a statement.

In an official statement on Monday, the company informed that the stake purchase is through a share swap arrangement, taking the APSEZ ports portfolio to 12 ports.

Karan Adani, CEO and Whole-time Director, APSEZ said, “Acquisition of GPL is a key milestone in consolidating our position as India’s largest transport utility and in achieving East Coast & West Coast parity. Gangavaram Port has excellent rail and road network connectivity and is the business gateway to the hinterland spread over eight states. The recent addition of a container handling terminal will enable us to accelerate our growth of cargo volumes.”

APSEZ’s world-class logistics synergies will propel Gangavaram Port to a potential cargo volume of 250 mt . This will boost the pace of industrialisation of Andhra Pradesh, added Adani.

The port

Gangavaram Port — located next to Vizag Port — is the gateway port for a hinterland spread over 8 states across eastern, southern and central India. It is the third 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, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT. Currently, the port operates 9 berths and has freehold land of ~1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL has sufficient headroom to support future growth.

The port handles a diverse mix of dry and bulk commodities including Coal, Iron Ore, Fertilizer, Limestone, Bauxite, Sugar, Alumina, and Steel. In FY2022, the port handled cargo volumes of around 30 million metric tonnes, generated revenue of ₹1,206 crore and EBITDA of ₹796 crore, which resulted in EBITDA margin of 66%.

GPL is a debt-free company with a cash balance of ₹1,293 crore as of March 2022 end, the APSEZ statement said.