APSEZ concludes acquisition of 10% stake in Gangavaram Port for ₹645 cr

September 23, 2021: Adani Ports and Special Economic Zone (APSEZ) has concluded the acquisition of the government of Andhra Pradesh’s stake of 10.4 percent in Gangavaram Port (GPL) with consideration of ₹645 crore.

“We are committed to accelerating the industrialization of Andhra Pradesh,” said Karan Adani, CEO and whole-time director of APSEZ. “The network of ports that we continue to build allows us to create an integrated mesh of logistics capabilities to deliver an unmatched set of services to our customers. Gangavaram is a major part of this mesh is one of India’s fastest-growing states. We are excited about the growth prospects of GPL, which is core to our east coast expansion strategy. GPL is advantageously located to allow us unprecedented access to the largely untapped hinterland market.”

The boards of APSEZ and GPL have also approved the merger of GPL with APSEZ taking into consideration GPL’s valuation of ₹120 per share and fair value of APSEZ at ₹754.8 per share, resulting in a swap ratio of 159 shares in APSEZ for 1,000 shares in GPL for 58.1 percent stake held by DVS Raju and Family in GPL. The merger, which has an appointed date of April 1, 2021, and is subject to NCLT approvals, is expected to conclude by March 31, 2022.

Earlier, in April 2021, APSEZ had acquired 31.5 percent from Windy Lakeside Investment Ltd, a Warburg Pincus affiliate, and had signed an agreement for a controlling stake of 58.1 percent held by DVS Raju and Family. Post the merger of GPL and APSEZ, DVS Raju and family will receive approx. 4.8 crore shares resulting in a 2.2 percent stake in APSEZ worth ₹3,604 crore.

GPL is debt-free with strong growth potential as part of the APSEZ portfolio. The transaction has been completed at an equity value of ₹6,200 crore and implies an EV/ FY21 EBTIDA multiple of 8.8x and results in EPS accretion of 7 percent to APSEZ FY 21 earnings.

GPL is a 64 MMT capacity non-major port established under a concession from the government of Andhra Pradesh (GoAP) that extends till 2059 and is the gateway port for a hinterland spread over 8 states across Eastern, Western, Southern and Central India. This acquisition significantly expands APSEZ’s access to several new markets. As a deep draft modern multipurpose port capable of handling fully laden Super Cape size vessels of up to 200,000 DWT, GPL handles a diverse mix of dry and bulk commodities including Coal, Iron Ore, Fertilizer, Limestone, Bauxite, Sugar, Alumina, and Steel.

In FY21, GPL had a cargo volume of 32.8 MMT, the revenue of ₹1,057 Cr and EBITDA of ₹625 crore and PAT of ₹494 crore In Q1 FY22, GPL handled 8.7 MMT of cargo and reported revenue of ₹313 crore, EBITDA of ₹215 crore and PAT of ₹192 crore. With several operational initiatives underway, GPL is all set to continue its strong growth and margin expansion.

"The addition of Gangavaram Port to the Adani Group’s pan-India port network tremendously strengthens APSEZ’s integrated logistics approach. With strong business momentum, capital structure efficiencies and a commitment to net zero emissions by 2025, APSEZ continues to deliver great value to its shareholders," reads the release.