Adani Ports & Special Economic Zone has entered into exclusive talks to acquire Gangavaram Port near Vishakhapatnam in Andhra Pradesh for $2.1 billion, a deal which could make the company a dominant player on the country’s eastern seaboard to capture the freight traffic in Bay of Bengal, people directly familiar with the matter said.
This could be the biggest acquisition for Adani Group, spearheaded by 53-year-old Gautam Adani, pipping its $2-billion Abbot Point Coal Terminal buy in Australia four years ago. Adani’s acquisition offer, through a fully leveraged route, comes more than a year after its $1-billion Dhamra port acquisition on the east coast in Odisha. The $10-billion conglomerate with primary interests in ports, power and natural resources was initially planning to clinch the deal after its planned $2.5-billion dollar bond issuance, which now has been postponed due to the Greece crisis.
Adani is expected to move ahead with deal making in the coming weeks after securing financing support from a clutch of banks, the sources cited earlier said. Adani has been on the prowl for acquisitions and has had preliminary talks to acquire Kattupalli shipyard and port complex, near Ennore in Tamil Nadu, owned by L&T Shipbuilding, sources added.
An Adani Group spokesperson declined to comment on what it termed market speculation, while Gangavaram Port management denied any such transaction, calling the news as false and baseless rumours.
India’s deepest port, Gangavaram is promoted by the D V S Raju family and has private equity major Warburg Pincus as a shareholder. The Raju family owns 58% stake, while Warburg Pincus has 31%. The government of Andhra Pradesh holds about 11% in the port company. Last week, a media report suggested that Adani was in preliminary talks to buy Warburg’s minority stake.
Warburg, which invested about $40 million seven years ago, is poised to post windfall gains, mopping up almost $650 million from the potential transaction. This could be one of Warburg’s heftiest gains from India after its blockbuster exit from Bharti Airtel a decade ago. Warburg had netted $1.83 billion selling the telco shares after investing $290 million. A spokesperson for Warburg Pincus did not respond to an emailed query at the time of going to press.
“Going by the history of Adani Group, it has always acquired 100% interest and has never picked up partial stakes in ports business. Adani is an operator and not an investor,” sources said.
This post was written by Atlantic Admin