Adani Ports and Special Economic Zone on Friday announced its decision to acquire a controlling stake in Krishnapatnam Port Company Limited (KPCL) in what would be the largest acquisition in the port sector in India.
The Gautam Adani-led company will buy a 75% stake in KPCL at an enterprise value of Rs 13,572 crore after prolonged talks to obtain the all-weather port in Andhra Pradesh. The all-cash deal will be funded through internal accruals and existing cash balance, the company said in a release.
Located at Krishnapatnam in Nellore district of Andhra Pradesh, north of Chennai, the port was developed in 2008 by CVR Group, which continues to own a majority stake. London-based private equity firm 3i Group owns a minority stake.
The port adds about 64 million metric tonnes (MMT) of annual cargo-handling capacity to Adani Ports’ kitty, increasing its market share by 5 percentage points to 27%. With Krishnapatnam, Adani Ports now has 12 ports and terminals across the country.
The deal comes close on the heels of the company’s subsidiary Adani Logistics announcing the acquisition of Snowman Logistics, a cold chain logistics company for Rs 296 crore.
The Adani Group, which has become one of the largest port developer and operators in the country, has been on an expansion spree with its eyes set on achieving 400 MMT cargo handling capacity by 2025.
“With the experience of successfully turning around acquisitions of Dhamra and Kattupalli ports, we are confident of harnessing the potential of KPCL and improve returns to stakeholders,” said Karan Adani, chief executive of Adani Ports and Special Economic Zone. The company had acquired the Dhamra and Kattupalli ports on the country’s eastern coastline in 2014 and 2018, respectively.
The younger Adani expects to increase KPCL’s capacity to 100 MMT in the next seven years and double the company’s Ebitda (earnings before interest, tax, depreciation and amortisation) in four years. In FY19, KPCL handled about 54 MMT of cargo, with an Ebitda of Rs 1,350 crore.
The transaction is expected to be completed within 120 days, subject to legal approvals, including that from the competition watchdog.
Source: Economic Times