Adani Ports and Special Economic Zone (APSEZ), the flagship transportation arm of the diversified Adani Group, has signed an agreement on 1 April 2021 with Vishwa Samudra Holdings, to acquire 25 percent stake of Adani Krishnapatnam Port (Krishnapatnam Port).
The cost of the acquisition is Rs 2,800 crore, and the consideration is in the form of cash. The transaction is expected to be completed within three months.
Together with the 75 percent ownership acquired in October 2020, the acquisition implies an enterprise value of Rs 13,675 crore implying an EV/FY21 EBITDA multiple of 10.3 times. Krishnapatnam Port is located on the east coast in Nellore district of Andhra Pradesh (approximately 180 km from Chennai Port) close to the border between Andhra Pradesh and Tamil Nadu. It is engaged in the business of handling containers, coal, break bulk and other bulk cargo including liquid cargo.
Krishnapatnam Port is an all-weather, deep water port with multi-cargo facility and current capacity of 64 million tpa. With a waterfront of 20 km and 6,800 acre of land, the port has a master plan capacity of 300 million tpa and 50-year concession.
The company is holding 75 percent stake of Krishnapatnam Port. Post-acquisition of 25 percent stake, the port will become wholly-owned subsidiary of the company.
The investment made by the company is in line with its strategy to increase its footprint in the state of Andhra Pradesh. The acquisition is subject to approvals under applicable laws, including approval of the Competition Commission of India.
The port is expected to have volumes of 38 million tonne, revenues of Rs 1,840 crore and EBITDA of Rs 1,325 crore in FY21. Since the acquisition, Krishnapatnam Port has focused on business process re-engineering which has resulted in EBITDA margins improving from 57 percent in FY20 to 72 percent in FY21.