Adani Ports and Special Economic Zones Ltd (APSEZ) will buy out New York-based private equity firm Warburg Pincus from a port.
It will acquire a 31.5% stake in Gangavaram Port Ltd for Rs 1,954 crore (around $268 million).
The transaction is taking place at an implied enterprise value-operating profit ratio of 8.9 and a P/E multiple of 12.
Adani added it is also in discussions to buy DVS Raju & Family’s 58.1% stake in the port near Andhra Pradesh’s Visakhapatnam Port.
The development comes two weeks after Adani completed the acquisition of Dighi Port Ltd for Rs 650 crore under the bankruptcy law. APSEZ also plans to invest over Rs 10,000 crore to develop the entity into a multi-cargo port.
Warburg Pincus had initially acquired a 30% stake in the all-weather Gangavaram Port for $35 million (around Rs 150 crore) in 2008.
It had been reportedly trying to exit the port for at least four years.
“The acquisition of Gangavaram Port is a part of our continued strategy to build out a port and logistics network that is unmatched in its ability to serve customers across the nation,” APSEZ chief executive and wholetime director Karan Adani said.
Gangavaram Port handles a mix of dry and bulk commodities including coal, iron ore, fertilizers, limestone bauxite, and sugar. It is a gateway port for a hinterland spread over eight states which operates nine berths and has freehold land of around 1,800 acres. The port has a master plan capacity of 250 million tonnes per annum with 31 berths.
According to VCCEdge, Gangavaram Port reported consolidated net sales and post-tax profit of Rs 963.7 crore and Rs 409.06 crore, respectively, for the 2018-19 financial year.
Shares of APSEZ were trading 3.09% up at Rs 752.1 at the time of writing this report. The company reported consolidated net sales and post-tax profit of Rs 11,873 crore and Rs 3,784 crore, respectively, for the 2019-20 fiscal.