BackPrivate equity firm buys 25% stake in Chennai Container Terminal
Private equity firm buys 25% stake in Chennai Container Terminal
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The Chennai-based Chettinad Group, owned by M. A. M. Ramaswamy, has sold 25% stake in Chennai Container Terminal Pvt. Ltd, the special purpose vehicle that operates and manages a one million twenty-foot equivalent unit (teu) capacity terminal at Chennai Port.
Global Infrastructure Partners, a private equity firm focused on global infrastructure asset investments, has agreed to acquire the stake in Chennai Container Terminal through its firm International Port Holdings.
Global Infrastructure Partners is a $1 billion (Rs4,100 core) private equity joint venture formed by investment bank Credit Suisse and US conglomerate General Electric Co.
The world’s third biggest container port operator, Dubai-government owned DP World, owns a majority 75% stake in Chennai Container Terminal.
The transaction is conditional on obtaining regulatory clearance from the Union government and approval from the Chennai Port Trust, Global Infrastructure Partners said in a statement.
The financial terms of the transaction were not disclosed.
Chennai is India’s second biggest container port after Jawaharlal Nehru Port in Mumbai. It handled 8.81 lakh teus in the 12 months to March 2007 and is expected to close the current fiscal with a million teus.
A teu is the standard size of a container and is a common measure of capacity in the container business.
Since its opening in 2001, the traffic at Chennai container terminal has grown at 18.7% a year, making it the second fastest growing container terminal in India.
To cater to the growing volume of cargo, the government-run Chennai Port has selected a consortium consisting of Singapore-government owned world’s second largest container port operator PSA Corp. and local firm SICAL Logistics Ltd to build a new 1.3 million teu capacity terminal at the port.
The new terminal is likely to start operations in December 2008.
“This is our first emerging market investment in such a high growth, high quality asset within India’s manufacturing hub. The Chennai container terminal provides a significant opportunity to gain a foothold in one of the most promising areas in the port sector. This investment significantly advances our global strategy of adding well-run port operating assets into our portfolio," said Adebayo Ogunlesi, chairman and managing partner of Global Infrastructure Management LLC, in a statement.
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