On March 23rd, the Adani Ports and Special Economic Zone (APSEZ) Ltd., announced its acquisition of 58.1% in Gangavaram Port Ltd. (GPL) from DVS Raju and family for Rs. 3,604 crores. Earlier in March, APSEZ announced the acquisition of Warburg Pincus’s 31.5% stake in GPL. This brings the total stake of APSEZ in GPL to 89.6% stake. The port is located in Northern Andhra Pradesh and is in close proximity to the Vizag port. The Government of Andhra Pradesh owns 10.4% of the project. The Gangavaram deal helps APSEZ expand its market share to 30% across 12 locations.
Gangavaram Port is the second largest non-major port in Andhra Pradesh with a 64-MMT capacity. GPL runs Gangavaram port and was awarded the rights by the Andhra Pradesh government to develop and operate the port for a period of 30 years starting from 2009 and extendable by two terms of ten years each till 2059. GPL handles a diverse mix of dry and bulk commodities including coal, iron ore, fertilizer, limestone, bauxite, sugar, alumina, and steel.
APSEZ acquired a 31.5% stake of Warburg Pincus for Rs. 120 per share and approximately 30 crore shares of DVS Raju and family at the same rate. For buying the 89.6% stake in Gangavaram Port, APSEZ cumulatively paid Rs. 5,558 crores. GPL is debt-free with operating revenue of more than Rs. 500 crore. GPL is contractually mandated to share 2.1% of its annual gross revenue with the Andhra Pradesh government till 2039, 4.2% from 2039 till 2049, and 8.4% between 2049 and 2059.
Mr. Karan Adani, CEO and Whole Time Director of APSEZ said, “The acquisition of GPL is a further augmentation of our vision of capitalizing 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.”
The Adani Group is making inroads to become a monopoly in Andhra Pradesh. In October 2021, APSEZ bought a 75% stake in Krishnapatnam port at an enterprise value of Rs. 12,000 crore. After factoring in the liabilities including debt of Rs. 7,500 crores, the total equity value was Rs. 4,500 crores, and APSEZ paid Rs. 3,395 crores for a 75% stake.
In February, the Government of Andhra Pradesh decentralized the Ramayapatnam port by making it a non-major port. This enabled the state government to sell the stake in the port to private companies. The contract was awarded to Aurobindo Realty. The state government is on the one hand promoting private involvement in the state, while on the other, claims to oppose the privatization of the Vizag Steel Plant.