Ahmedabad: Billionaire Gautam Adani’s Adani Ports and Special Economic Zone Ltd (APSEZ) is looking to acquire a controlling stake in Gujarat Pipavav Port Ltd (GPPL), according to three people close to the development.
The company has initiated talks to acquire APM Terminals Management B.V.’s 43.01% stake in GPPL, said the people on condition of anonymity. The enterprise value of the port is close to $1 billion, they said.
If the transaction materializes, APSEZ may look to acquire a controlling stake of 51% or more by way of an open offer, according to the people. Apart from APM Terminals, foreign institutions hold 37.19% stake and Indian institutions hold 13.34% of GPPL, with non-promoter holding being 1.79%. About 4.67% is with the public and others.
APM Terminals, a part of the AP Moller Maersk group, which is looking to exit the project, has hired HSBC Holdings Plc. to advise it on the deal, said two of the three people cited above. The company has also initiated a bidding process in which Adani group has participated, they said.
GPPL has set up a joint venture company, Pipavav Railways Corporation Ltd, with the equity participation of the ministry of railways. APM Terminals is looking to exit this venture, said one of the two officials.
When contacted, a spokesperson for the Adani group said the company is always on the look-out for organic and inorganic growth in the ports sector, but would not like to comment on any specific deal. “As a matter of policy, Gujarat Pipavav Port Ltd, also known as APM Terminals Pipavav, does not comment on market speculation,” an APM Terminals spokesperson said in response to an e-mailed query.
Apart from the Adani group, Sajjan Jindal’s JSW group has also held talks on acquiring APM Terminals’s stake in GPPL a few months ago, said an industry official close to the company. An e-mail query sent to JSW remained unanswered.
APSEZ owns and operates eight ports and terminals in India, including Mundra, Dahej, Kandla and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Visakhapatnam in Andhra Pradesh, and Katupalli in Chennai. The company is developing a terminal at Ennore in Tamil Nadu and Vizhinjam in Kerala.
Pipavav port in Gujarat in 1998 became the first private port to start operations, three years before Mundra. The two ports were part of the Gujarat government’s build, own, operate and transfer (BOOT) policy framed in 1995. In the past one decade, Mundra port has expanded and overtaken all state-run and private sector ports in India in terms of cargo handling.
A Mumbai-based analyst said that while the Pipavav Port has done well in the last few years in terms of cargo handling, competitive tariffs and introducing mechanization that reduced the cargo turnaround time, the port has been facing tough competition from Mundra Port, Kandla Port and Jawaharlal Nehru Port Trust (JNPT).
“In India, Adani group is the biggest and most successful private port operator. So if APM Terminals decides to exit, for reasons best known to them, I think it makes great sense for APSEZ, as it is their direct competition especially in the container business,” the analyst said on conditions of anonymity.