APSEZ all set to acquire remaining 58.1% share in Gangavaram port

Gangavaram in the north and Krishnapatnam in the south are considered strategically placed to tap the hinterland that Andhra Pradesh offers.

BySNV Sudhir

Published Oct 11, 2022 | 9:31 PM Updated Oct 11, 2022 | 9:33 PM

Gangavaram port

The Adani Ports and Special Economic Zone Ltd (APSEZ) is all set to acquire the remaining 58.1 percent stake in Gangavaram Port Limited (GPL), with the NCLT of Hyderabad and Ahmedabad giving their nod.

With the acquisition of the remaining stake, the Gautam Adani-led Adani Group’s port capacity will go up to 24 percent of the total port capacity in the country.

With this stake purchase, GPL will become a 100 pecent subsidiary of APSEZ.

The new acquisition means APSEZ now owns two private ports in Andhra Pradesh — Krishnapatnam in Nellore and Gangavaram in Visakhapatnam.

Until three years ago, APSEZ had little presence in Andhra Pradesh, as it operated just one terminal/berth at a major port in Visakhapatnam.

Gangavaram in the north and Krishnapatnam in southern Andhra Pradesh are considered strategically important to tap the business hinterland of the state.

APSEZ now has six strategically located ports and terminals on the west coast: at Mundra, Dahej, Tuna and Hazira in Gujarat, Mormugao in Goa, and Dighi in Maharashtra. It also has five ports and terminals on the east coast of India: at Dhamra in Odisha, Gangavaram and Krishnapatnam in Andhra Pradesh, and Kattupalli and Ennore in Chennai.

Gangavaram port details

The Gangavaram port acquisition was priced at ₹6,200 crore with 517 million shares at ₹120 per share.

The port is located in the northern part of Andhra Pradesh next to the Visakhapatnam port.

It is the third-largest non-major port in Andhra Pradesh with a 64 MMT capacity established under a concession from the government of Andhra Pradesh that extends till 2059.

APSEZ has already acquired a 31.5 percent stake in the company from the US-based private equity firm Warburg Pincus and another 10.4 percent from the Andhra Pradesh government in FY22.

The acquisition of this 58.1 percent stake from DVS Raju and family, who are the promoters of Gangavaram port, will be through a share swap arrangement and will result in the issuance of around 47.7 million APSEZ shares to the erstwhile GPL promoters.

“The 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,” said APSEZ CEO and Director Karan Adani.

Stake sale on SBICAP recommendation

The state government decided to go ahead with the disinvestment of its stake in GPL based on the recommendation of SBI Capital Markets Ltd (SBICAP).

The AP Maritime Board (APMB) had engaged SBICAP for evaluating the proposals of APSEZ on buying the government’s stake.

SBICAP recommended that the state go in for disinvestment as per the guidelines of its disinvestment policy of the Central government for better price discovery and negotiations.

The SBICAP has made it clear that disinvestment by way of direct sale was the best option available for the state.

APSEZ had approached the state for its stake of 5,37,31,700 shares in GPL at a price of ₹120 per share, transacting for consideration of ₹645.1 crore or receive shares in APSEZ worth ₹645.1 crore because of the proposed merger between GPL and APSEZ.

AP gave 1,800 acres to develop port

The government of Andhra Pradesh provided 1,800 acres of land to the Gangavaram port project valued at ₹54 crore, treating it as government investment towards 10.4 percent equity in the GPL.

The state government earned ₹277.97 crore from Gangavaram port, in the form of lease rentals on land, revenue share from 2009-10, and dividends from 2016-17.

After the completion of Phase-I of the project, GPL commenced port operations on 17 April, 2009.

The state government received ₹11.14 crore on lease rentals on the total extent of 1086.46 acres, ₹183.56 crore as 2.1 percent revenue share from 2009-10 till date, and ₹83.27 crore as dividends towards 10.4 percent equity share from 2016-17 till date totalling to Rs 277.97 Crores.

Krishnapatnam port acquisition valued at ₹13,675 crore

It was in April last year that APSEZ announced the acquisition of the residual 25 percent stake in Krishnapatnam Port Ltd in the Nellore district, held by Vishwasamudra Holdings, for ₹2,800 crore.

This resulted in APSEZ increasing its stake from 75 percent to 100 percent in Krishnapatnam port.

Together with the 75 percent ownership acquired in October 2020, the acquisition implies an enterprise value of ₹13,675 crore.

The Krishnapatnam port is located on the east coast of India, 180 km from Chennai Ports, and close to the border between Andhra Pradesh and Tamil Nadu.

It is an all-weather deepwater port that has a multi-cargo facility with a current capacity of 64 MMTPA.

With a waterfront of 20 km and 6,800 acres of land, Krishnapatnam port has a master plan capacity of 300 MMTPA and a 50-year concession.