APSEZ acquires stake in GPL

Adani Ports andSpecial Economic Zone Limited (APSEZ) has announced the acquisition of a 31.5per cent share in Gangavaram Port Limited (GPL) at an enterprise value of `56.5-billion (US$772-million),along with a composite scheme of arrangement to fully acquire Sarguja RailCorridor Private Limited (SRCPL) at an enterprise value of `59.8-billion (US$817-million).The GPL acquisition is likely to be completed within 45 days, subject toregulatory approvals, while the SRCPL transaction requires approvals fromminority shareholders, creditors and regulatory authorities.

The addition ofGPL, a multi-cargo port that handles a mix of dry and bulk commodities, andSRCPL will enhance APSEZ’s cargo mix, geographical service areas, and off-takerquality, as well as increase its market share to 30 per cent.

APSEZ willacquire the minority equity in GPL from Warburg Pincus for around `19.5-billionusing its existing cash balance and internal accruals. GPL does not have anydebt on its balance sheet. APSEZ is also in discussions to acquire the majorityshareholder’s 58.1 per cent stake in GPL.

The acquisitionof GPL will complement APSEZ’s recent acquisition of Krishnapatnam Port CompanyLimited, which serves the hinterland of south and central Andhra Pradesh, and allowAPSEZ achieve greater diversification by increasing volume from India's eastcoast.

APSEZ will alsoacquire SRCPL, which operates a 70-kilometer railway, along with its parentBrahmi Tracks Management Services Private Limited (BTMSPL), from the Adanifamily, as part of the composite scheme of arrangement, for `47.7-billion,which will be funded through fresh equity issuance. SRCPL and BTMSPL have netdebt of around `12.1-billion.

The Adanifamily's shareholding in APSEZ will increase to 64.95 per cent from 63.74 percent, upon completion of the transaction. The acquisition of SRCPL willconsolidate all of Adani group’s rail assets under APSEZ for greater economiesof scale and operational efficiency.


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