The Adani Group on Tuesday announced the acquisition of 58.1% stake held by DVS Raju and family in Gangavaram Port Limited (GPL) for Rs 3,604 crore. The acquisition is being made by Adani Ports and Special Economic Zone (APSEZ) Ltd and is subject to regulatory approvals.
APSEZ had earlier announced the acquisition of Warburg Pincus’s 31.5% stake in GPL on March 3, 2021. With the latest acquisition, APSEZ would have a controlling stake of 89.6% in GPL.
GPL is located in the northern part of Andhra Pradesh, next to Vizag Port. It is the second-largest, nonmajor port in Andhra Pradesh with a 64 MMT (million metric tons) capacity established under a concession from the 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 (Deadweight tonnage). Currently, GPL operates 9 berths and has freehold land of approximately 1,800 acres.
With a master plan capacity of 250 MMTPA (million metric tonnes per annum) with 31 berths, GPL has sufficient headroom to support future growth.
APSEZ claims 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, a revenue of Rs 1,082 crore, EBITDA ( earnings before interest, taxes, depreciation, and amortization) of Rs 634 crore (59% margin) and PAT (Profit After Tax) of Rs 516 crore. GPL is debt-free with a cash balance of over Rs 500 crore.
The company has a paid-up share capital of 51.7 crore shares of which 58.1% is owned by DVS Raju and Family (Promoter), 10.4% by the Government of Andhra Pradesh and 31.5% by Warburg Pincus.
APSEZ announced the acquisition of a 31.5% stake of Warburg Pincus on March 3, 2021, for Rs 120/share and shall acquire the DVS Raju stake of approximately Rs 30 crore shares (58.1%) also at Rs 120/share which works out to a consideration of Rs 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.
Karan Adani, CEO and Whole Time Director of APSEZ said, “The acquisition of GPL is a further augmentation of our vision of capitalising on an expanded logistics network effect that generates greater value as it expands. 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.”
He further added, “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 industrialisation 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.”