APSEZ unlocks India’s eastern hinterland; acquires Andhra Pradesh government’s remaining 10.4% in Gangavaram Port

Adani Ports and Special Economic Zone (APSEZ), India’s largest private Ports & Logistics company has concluded acquisition of Government of Andhra Pradesh’s (GoAP) stake of 10.4% with a consideration of Rs 645 cr.

The boards of APSEZ and GPL have also approved the merger of GPL with APSEZ taking into consideration GPL’s valuation of Rs. 120 per share and fair value of APSEZ at Rs 754.8 per share, resulting in a swap ratio of 159 shares in APSEZ for 1,000 shares in GPL for 58.1% stake held by DVS Raju and Family in GPL.

The merger, which has an appointed date of 1 April 2021 and is subject to NCLT approvals, is expected to conclude by March 31, 2022.

Earlier, in April 2021, the flagship transportation arm of the diversified Adani Group had acquired 31.5% from Windy Lakeside Investment Ltd, a Warburg Pincus affiliate, and had signed an agreement for controlling stake of 58.1% held by DVS Raju and Family. Post the merger of GPL and APSEZ, DVS Raju and family will receive approx. 4.8 cr shares resulting in ~2.2% stake in APSEZ worth Rs 3,604 cr.

GPL is debt free with strong growth potential as part of the APSEZ portfolio. Transaction has been completed at an equity value of Rs 6,200 crs and implies an EV/ FY21 EBTIDA multiple of ~8.8x and results in EPS accretion of ~7% to APSEZ FY 21 earnings.

GPL is a 64 MMT capacity non-major port established under concession from 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, revenue of Rs. 1,057 Cr and EBITDA of Rs 625 cr and PAT of Rs 494 cr. In Q1 FY22, GPL handled 8.7 MMT of cargo and reported revenue of Rs 313 cr, EBITDA of Rs 215 cr and PAT of Rs 192 cr. With several operational initiatives underway, GPL is all set to continue its strong growth and margin expansion.

“We are committed to accelerating the industrialisation 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 in 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 addition of Gangavaram Port to the Adani Group’s pan-India port network tremendously strengthens APSEZ’s integrated logistics approach.

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