Private equity biggie Warburg Pincus has picked up a 30% stake for $35 million (Rs 150 crore) in India's deepest port, Gangavaram Port Ltd at Gangavaram, Andhra Pradesh, reports Mint.The investment in the first phase of the project is expected to be Rs 1,700 crore, and the inauguration of the port is expected to be in the first week of October. Gangavaram is located just 15 km away from the Union government-owned Visakhapatnam port.
The project is a public private partnership between State Government of Andhra Pradesh and D.V.S. Raju, the co-founder of Satyam Computer Services Ltd. Raju has the rights to develop and operate the port for 30 years. In an increasing sign of public-private partnership in infrastructure, engineering major L&T Ltd and Karnataka Power Corporation Ltd (KPCL) are also on the verge of entering into a joint venture agreement for acquiring a coal mine in Indonesia.
Shareholding Pattern
While 59% stake in Gangavaram is held by Raju, the Andhra Pradesh government has a shareholding of 11%. The private equity investor holds the remaining 30% of the equity stake in Gangavaram. The port has also raised a debt of Rs 1,200 crore from 13 banks, led by State Bank of India.
Gangavaram is an all weather, deepwater, multi-purpose port facility. The port will have deeper drafts (20m), advanced material handling system, vast storage areas for all types of cargo and extensive ancillary facilities like Coal Blending facilities, Tankages etc. Gngavaram has also signed state-owned Rashtriya Ispat Nigam Ltd that runs the Visakhapatnam Steel Plant as a customer. The depth of the port will help it handle large bulk carriers with a cargo carrying capacity of up to 200,000 tonnes.
Private Equity Investments In Ports
There have been quite a few private equity investments in ports business. Gujarat Pipavav Port has raised funds from a number of investors including IDFC PE, IL&FS and NYLIM Jacob Ballas. Also 3i Group has invested $50 million in Mundra Port and Special Economic Zone. It has also now submitted a proposal to the FIPB to invest Rs 800-1,000 crore for a 15-26% stake in Krishnapatnam Port Co. Ltd. Varun Shipping Company also raised Rs 169 crore in 2006 from a consortium of six investors including Societe Generale and IL&FS.