Adani Ports
and Special Economic Zones Ltd. agreed to buy a Rs 1,954-crore stake in Gangavaram
Port Ltd. from Warburg Pincus.
Windy Lakeside Investment, an
affiliate of the private equity firm, will sell its 31.5% in the port to the
Adani Group firm, according to an exchange filing. The transaction is subject
to regulatory approvals.
Adani Ports is also in talks
with promoters DVS Raju and Family for their 58.1% stake (about 30 crore
shares) in the port. The remaining 10.4% is held by the Government of Andhra
Pradesh.
The port, located in the
northern part of the state close to Vizag, has a
capacity of 64 million metric tonnes. It was
established under concession from the state that extends till 2059.
Gangavaram is an all-weather, deep
water, multi-purpose port capable of handling fully-laden super-cape sized
vessels of up to 200,000 deadweight tonnage. It's a gateway to eight states
across eastern, western, southern and central India.
According to the filing:
·
In FY20, the port handled cargo volume of 34.5 MMT,
generated revenue of Rs 1,082 crore, operating income
of Rs 634 crore, margin of 59% and a net profit of Rs 516 crore.
·
GPL is debt free with a cash balance of over Rs 500 crore.
·
Adani Ports is acquiring about 16.3 crore shares at Rs 120 apiece, which works out to Rs
1,954 crore.
·
Based on FY20 numbers, the transaction implies EV/Ebitda multiple of 8.9 times and a P/E multiple of 12
times.
Concall Highlights
In an analyst call after
announcing the deal, Adani Ports said:
·
Warburg Pincus has been trying
to sell the port for the last five years.
·
The PE firm was looking to sell due to end of life of
their invested funds.
·
It was also considering IPO or sale of to other PE funds, strategic partners.
·
Raju & family weren’t interested in the controlling
stake in port.
Adani Ports also signed a scheme
of arrangement with group subsidiaries Brahmi Tracks Management Services, Adani
Tracks Management Services, Sarguja Rail Corridor,
according to another filing.
The scheme provides for:
·
Amalgamation of Brahmi with Adani Ports with effect from
April 1.
·
Merger of Adani Tracks with Sarguja
with effect from the April 2.
·
Transfer of the Mundra Rail
Business (Divestment Business Undertaking) as a going concern on a slump sale
basis with effect from April 2 by Adani Ports To Sarguja for a lump sum consideration.
The objective of the scheme is
to consolidate the rail assets under one entity; tap private partnership
opportunity for developing the first-mile, last-mile connectivity and
increasing the network capacity for rail transport, the company said.
Share Swap
·
Adani Ports will credit 100 shares for 708 equity shares
of the face value by held by Brahmi.
·
Sarguja would credit 100 shares for
every 2522 equity shares held by Adani Tracks.
·
Sarguja shall pay a lump sum
consideration of Rs 188.65 crore to Adani Ports for
transfer of the Mundra Rail Business.