Hyderabad: Global private equity firm 3i Group Plc. may invest Rs800-1,000 crore for a 15-26% stake in Krishnapatnam Port Co. Ltd, the developer and operator of an all-weather, deep-water port in Andhra Pradesh, the biggest investment by a foreign private equity firm in India’s port sector.
The UK-based firm has filed for approval with the Foreign Investment Promotion Board (FIPB), the agency that clears overseas investments into India, said Chinta Visweswar Rao, chairman of Hyderabad-based CVR Group, which controls Krishnapatnam Port Co.
The company has not yet signed an agreement with 3i Group, Rao said, in a departure from the usual practice of firms tying up partnerships with foreign investors before seeking FIPB approval.
“We preferred to sign the agreement only after the foreign investor obtained clearance from FIPB,” Rao said, adding that some other foreign private equity firms had also evinced interest in investing in the port company.
Rao’s claim couldn’t be independently confirmed.
“As a practice, 3i does not comment on any deal until it is done,” said an email response from 3i’s public relations agency.
An FIPB official declined to comment saying the issue involved the commercial interests of two firms.
3i Group had in November 2006 invested $44.4 million (Rs194.2 crore at the current exchange rate) for a 10% stake in construction firm Navayuga Engineering Co. Ltd, the flagship company of the CVR Group, formerly known as the Navayuga group.
Krishnapatnam Port Co. was formed by CVR Group to develop and operate a Rs10,000 crore, 100 million tonnes (mt) a year capacity port on the country’s eastern coast, at Krishnapatnam in Andhra Pradesh’s Nellore district.
India’s ports are projected to increase their total cargo handling capacity to 1,855mt by 2012 from about 758mt now, with an investment of about Rs1 trillion, as the country’s foreign trade expands. Private firms are expected to invest at least 65%, or Rs65,532 crore of this, according to the shipping ministry.
3i invested in Mundra Port and Special Economic Zone Ltd, a company promoted by the Adani Group to develop and operate the Mundra port and special economic zone, or SEZ, in Gujarat.
Shareholders in another private port operator, Gujarat Pipavav Port Ltd, include New York Life International India Fund (Mauritius) Llc.
Krishnapatnam port, about 200km north of Chennai, is being developed in three phases. The first phase, which cost Rs1,200 crore, has the capacity to handle about 24mt of cargo a year and started commercial operations in July, signing on as customers mine owners in Andhra Pradesh and Karnataka such as MSPL Ltd and Mineral Enterprises Ltd.
The third and final phase of the port is slated for completion by 2013.
The port, the deepest in the country with a depth of 15.6m, has around 6,000 acres of so-called custom bonded area, or space where goods can be stored, India’s largest, and would cater to the iron ore, coal, automobile, textile and other sectors, said C. Sasidhar, managing director of Krishnapatnam Port Co. It would also have dedicated facilities to handle container cargo.
With more than 10,000MW of power capacity coming up in and around Krishnapatnam, the port expects to handle around 40mt of coal imports a year for power producers including Reliance Power Ltd’s 4,000MW power project and a 2,120MW project being built by Navayuga Engineering Co.
P. Manoj in Bangalore contributed to this story.