Adani Ports and Special Economic Zone (APSEZ) gained approval from the NCLTs of Ahmedabad and Hyderabad on Monday to buy the remaining 58.1per cent share in Gangavaram Port under a composite scheme of arrangement. Having said that, GPL is getting closer to being a 100per cent subsidiary of the Adani Group-backed enterprise. GPL is located in northern Andhra Pradesh, near Vizag Port.
GPL is Andhra Pradesh’s third largest non-major port, with a 64 MMT capacity created under a concession from the Government of Andhra Pradesh (GoAP) that runs until 2059. GPL was acquired for a total of 6,200 crores in 517 million shares at a price of 120 per share. Adani Ports will acquire a 58.1per cent shareholding from DVS Raju and family through a share swap agreement, resulting in the issue of approximately 47.7 million APSEZ shares to the former GPL promoters. “The deal implies an EV/EBITDA multiple of roughly 7.8x (FY22 EBITDA of 796 crores), which adds value to APSEZ shareholders from day one,” Adani Ports said in a filing.
Adani Ports has already bought a 31.5per cent share in the company from Warburg Pincus and a 10.4per cent stake from the Government of Andhra Pradesh in fiscal year 22.
Karan Adani, CEO and Whole-time Director of APSEZ, stated in the regulatory filing, “The acquisition of GPL is a critical milestone in cementing our position as India’s largest transport utility and achieving East Coast and West Coast parity.” Gangavaram Port has good rail and road network connectivity and serves as the business gateway to the eight-state hinterland. The recent construction of a container handling terminal will allow us to expedite cargo volume expansion. “
Adani continued, “APSEZ also adds world-class logistics efficiencies to the table, allowing Gangavaram Port to potentially handle 250 MMT of cargo. This will hasten Andhra Pradesh’s industrialization. “
GPL is a versatile, all-weather, deep-water port capable of receiving fully laden supercap-size vessels of up to 200,000 DWT. The port currently has 9 berths and 1,800 acres of freehold property. Adani Ports stated in the filing that GPL has ample headroom to sustain future expansion with a master plan capacity of 250 MMTPA and 31 berths.
According to the filing, GPL will benefit from Adani Port’s pan-India footprint, logistics integration, a customer-centric philosophy, operational efficiencies, and strong balance sheet to deliver a combination of high growth by increasing market share and adding extra cargo types, as well as improved margins and returns.
As of March 31, 2022, GPL was debt-free, with a cash balance of 1,293 crores. In FY22, the port handled over 30 million metric tonnes of cargo, with revenue of 1,206 crores and EBITDA of 796 crores, resulting in an EBITDA margin of 66per cent. Adani Ports shares closed at 807.85 on the BSE, down 1.10per cent. The company’s market capitalization is approximately 1,70,648.07 crore.
