Adani to acquire 58% more stake in Gangavaram port in AP for ₹3,604 cr

March 23, 2021: The Adani Ports and Special Economic Zone (APSEZ) today announced that it is acquiring the 58.1 percent stake held by DVS Raju and family in Gangavaram Port (GPL) at Visakhapatnam in Andhra Pradesh for ₹3,604 crore.

On March 3, 2021, APSEZ had announced the acquisition of Warburg Pincus's 31.5 percent stake in GPL and together with this acquisition, APSEZ would have 89.6 percent stake in GPL.

Karan Adani, CEO and whole-time director of APSEZ said, "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 the potential to become a 250 MMT port. This will undoubtedly help accelerate the industrialization 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 now has 2 ports in Andhra Pradesh at Krishnapatnam and Gangavaram.

Gangavaram Port
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 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.

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, southern and central India.

In FY20, GPL had a cargo volume of 34.5 MMT, the revenue of ₹1,082 crore, EBITDA of ₹634 crore (59 percent margin) and PAT of ₹516 crore GPL is debt-free with a cash balance of over ₹500 crore.

The company has a paid-up share capital of 51.7 crore shares of which 58.1 percent is owned by DVS Raju and Family (promoter), 10.4 percent by the government of Andhra Pradesh and 31.5 percent by Warburg Pincus.

APSEZ announced the acquisition of a 31.5 percent stake of Warburg Pincus on March 3, 2021, for ₹120/share and shall acquire the DVS Raju stake of ~30 crore shares (58.1 percent) also at ₹120/share which works out to a consideration of ₹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.