BackGujarat Pipavav Port raises Rs350 crore via QIP
Gujarat Pipavav Port raises Rs350 crore via QIP
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Mumbai: Gujarat Pipavav Port Ltd has raised Rs350 crore through a qualified institutional placement (QIP) and a preferential issue of shares to its promoter.
Kotak Mahindra Capital Co. Ltd and IDFC Capital Ltd acted as the book-running lead managers for the QIP.
“This is an important capital market initiative by the company and its first QIP offering," said Hariharan Iyer, chief finance officer at Gujarat Pipavav and APM Terminals Pipavav.
Those allotted shares include Bajaj Life Insurance, SBI Life Insurance, Franklin Templeton, Kotak Mahindra, Vanguard International Explorer Fund, Schroder Asia Pacific Fund Plc and Jardine Fleming.
The company will use the funds largely to repay loans early in order to strengthen its balance sheet and facilitate funding options for expansions.
The company plans to expand capacity and improve operational efficiency at APM Terminals Pipavav, it said. The total cost of the expansion is expected to be about Rs1,097 crore.
“We propose to increase capacity for container cargo to approximately 1.5 million TEUs (20-foot equivalent units) and capacity for bulk cargo to approximately 10 million tonnes," said Prakash Tulsiani, managing director at Gujarat Pipavav.
Gujarat Pipavav is the developer and operator of APM Terminals Pipavav, located in Gujarat and one of India’s fastest growing ports. The promoters of the company, APM terminals, bought a majority stake in the company in 2005 and after modernising the facilities, the port began marketing its services to clients based in north-west India. The company had an initial public offering (IPO) in 2010. The port is part of an international network of ports and terminals belonging to APM Terminals, which is part of the ZZ-based AP Moller-Maersk group.
In a 3 July report, international brokerage Espírito Santo Investment Bank Research said the port recently announced a Rs11 billion (Rs1,100 crore) capital expenditure plan to expand its container capacity to 1.5 million TEUs (with the addition of 0.2 million TEU) and solid bulk capacity to 10 million tonnes (addition of 5 MT).
“Gujarat Pipavav management has always maintained that its key focus is on developing the container business," it said. “Considering this, we think the 0.2 million TEU capacity addition is insufficient and the company will have to undertake another expansion plan in the next two years," the report said.
With no significant capacity addition, the fresh equity issue is likely to cause a 12% dilution, affecting shareholder value, the report cautioned.
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