APSEZ plans to fund the acquisition through internal accruals and existing cash accruals
Adani Ports & Special Economic Zone (APSEZ), led by billionaire Gautam Adani, on Friday said it would acquire a controlling stake of 75% in Krishnapatnam Port (KPCL) in Andhra Pradesh for a cash consideration of Rs 13,500 crore. The acquisition of 64 million tonne (mt) capacity will help Adani Ports achieve its target of 400 mt of cargo handling capacity by FY25.
India’s largest port developer plans to fund the acquisition through internal accruals and existing cash accruals of the company, and expects the acquisition to be completed in 120 days subject to regulatory approvals, including from the Competition Commission of India, the company said in a statement.
The company said the credit metrics of APSEZ at consolidated level would not change with this transaction. The net debt to Ebitda of consolidated APSEZ including of Krishnapatnam Port in FY21 is expected to be around 3.2 times, which is in line with the pre-acquisition of net debt to Ebitda of 3.1 times in FY19.
As of March 2019, Adani Ports had a cash and cash equivalent of Rs 5,967.30 crore while net debt stood at Rs 27,545.66 crore. Karan Adani, chief executive and whole-time director of APSEZ, said: “KPCL (Krishnapatnam Port) is a crown jewel to join APSEZ’s string of pearls, our network of 10 economic gateways to India and this acquisition would accelerate our stride towards FY25 vision of handling 400 mt of cargo. Given the best-in-class infrastructure and the distinct hinterland catered by KPCL, this acquisition will not just increase our market share to 27% but also add remarkable value to our pan-India footprint.”
Krishnapatnam Port, a mutli-cargo facility, is owned by the Andhra Pradesh government and was given to Hyderabad-based CVR Group for development and operations on a 30-year contract beginning September 2004. The port contract can be extended up to 50 years. Currently, the port has a draft of 18.5 metres, a depth that can accommodate full-loaded Capesize vessels of 200,000-tonne capacity.
The Krishnapatnam Port has a capacity of 64 mt and handled 54 mt of cargo in FY19. In FY19, the port reported an increase in revenue at Rs 2,394 crore compared with Rs 1,969 crore in FY18 and Rs 1,755 crore in FY17. The deal comes just days after APSEZ subsidiary Adani Logistics agreed to buy Snowman Logistics for Rs 296 crore in December 2019, marking its foray into the cold-chain logistics segment.