Antwerp port to buy stakes in Essar Ports projects in six months

Written by Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Dec 9 2011, 08:03am hrs
Port of Antwerp International (PAI), a subsidiary of Belgium-based Port of Antwerp, the second largest in Europe, is planning to acquire stakes in ports developed by Essar Ports.

We will pick up stakes in different port projects of Essar, said a senior company official of the Port of Antwerp. We will do it over a span of six months from now. The Belgian port major will partner with the Ruias of Essar by forming a special purpose vehicle to build ports.

We had signed an MoU last year, a senior company official said. We have not concluded any talks with Port of Antwerp.

Ruias, the promoters of the diversified conglomerate, own an 83.71% stake in Essar Ports, while rest 16.2% is held by the public.

PAI signed an MoU with Essar Ports in February, 2011, to provide advisory and consultancy, investment, training and enhancing commercial relations in both India and abroad.

The MoU with Essar Ports, which can handle 88 million metric tonnes or mmt cargo a year, was part of PAI's ambition to expand in fast-growing economies like India, Brazil and Africa. PAI handled 178.2 mmt of freight in 2010.

As per the shipping ministry's maritime agenda 2010-2020, port traffic is expected to triple in next 10 years to 2,495 mmt and capacity to 3,130 mmt.

Essar Ports, which owns a port each in Vadinar and Hazira in Gujarat, primarily handles crude and petroleum products for the group's refinery and iron ore and coking coal for its steel plants. The company has been trying to increase its revenue by handling cargo for other companies and has plans to expand overseas by bidding for building ports.

Both ports can operate in all weathers and can handle up to 30 mmt a year of dry bulk cargo in Hazira and 58 mt liquid cargo in Vadinar.

PAI has been bullish on India as Europe slows down.

We bring operational expertise of a large port, said Luc Arnouts, chief commercial officer, PAI at the Indian Ports & Shipping 2011 conference here on Wednesday. We can bring efficiency in imports handling and logistics activities of a port. Our master plan would be to equip them to handle all commodities, at the same time developing the container business and have diversified port operations, he added.

More than loading and unloading, PAI owns warehouses and packaging unit to offer one-stop delivery to its clients. The Belgian company will follow a model where it would replicate in other ports they pick up stake in, Arnouts said.

Talks between the firms for a stake sale have been in the works since February, said an analyst with a foreign brokerage.

PAI will pick up stake mostly in Hazira as it has scalability and a waterfront available. The value of the Hazira port will increase once it gets government nod to expand its second terminal, he added.

PAI chooses to limit its investments to Essar Ports for now. Since we have an MoU with them, we hope to invest with Essar, Arnouts said, without saying how much they would invest. On Thursday, Essar Ports shares ended 3.74% down to Rs 68.30 on the BSE.