Pipavav Port raises $100 mn in rights issue to fund expansion

Pipavav Port raises $100 mn in rights issue to fund expansion

Mumbai: The company that operates and manages India’s first private port located on the western coast, Gujarat Pipavav Port Ltd, has completed a $100 million (Rs394 crore) rights issue to part fund its expansion plans, a top executive said.

Gujarat Pipavav Port is promoted by APM Terminals Management BV, the container terminal operating division of Danish shipping and oil conglomerate A.P. Moller-Maersk Group. APM Terminals is the largest shareholder of Gujarat Pipavav Port.

“We have recently raised $100 million through a rights issue of shares to existing shareholders," said Philip Littlejohn, managing director, Gujarat Pipavav Port. Littlejohn declined to reveal the pricing of the rights issue.

Other shareholders of the company include New York Life International India Fund (Mauritius) Llc., IDFC Infrastructure Fund, The Infrastructure Fund of India, IL&FS Trust Co. Ltd, Jacob Ballas Capital India Pvt. Ltd, Unit Trust of India, Industrial Development Bank of India Ltd and India Infrastructure Fund.

Except for New York Life International India Fund, all the other investors subscribed to their respective portion of the rights issue, a source familiar with the development said. “Apart from subscribing to its own portion, APM Terminals also picked up the rights share of New York Life," the source, who did not wish to be identified, added.

Following this, APM Terminals’ stake has gone up from about 52% to 54.8% in Gujarat Pipavav Port Ltd. A rights issue is a secondary market offering of shares for raising money. Existing shareholders of a firm have the privilege to buy a specified number of new shares at a specified attractive price within a specified time. A rights issue is offered to all existing shareholders individually and may be rejected, accepted in full or accepted in part by each shareholder.

India is expanding the capacity of its ports to meet the rising demand for handling cargoes shipped in steel containers in the world’s second fastest growing major economy. The container cargo traffic at Indian ports is expected to grow to 12.5 million, 20-foot equivalent units, or TEUs, by 2011-12 from the current level of about 6 million teus.

Out of this, 93% or 11.7 million TEUs are expected to be handled by the 12 Union government owned major ports. The balance will be handled by private ports such as Pipavav, Mundra, Karaikal, Krishnapatnam and Vizhinjam. A TEU is the standard size of a container and is a common measure of capacity in the container business.

APM Terminals, the global port operator, is expanding the capacity of the container terminal at Pipavav to handle more than 1 million teus by March from the existing level of 5 lakh teus. Cargo handling operations at Pipavav started in November 1996. The port currently handles containers from a berth of 350m with three quay gantry cranes, eight rubber-tyred gantry cranes (RTGs), eight reach stackers and 135,000-sq. m of container yard.

Quay gantry cranes and RTGs are specialized equipment used for loading and unloading containers to and from a ship. The expansion of Pipavav port involves building a 385m-long new container berth and installing three quay gantry cranes and 10 RTGs. It also involves expanding the container yard by 105,000-sq.m and also the port’s coal yard.

Pipavav port handled 130,000 TEUs in 2006 and is expected to close 2007 with a container volume of 210,000 TEUs, Littlejohn added.

The container terminal at the port offers direct weekly services to Europe, the US East Coast and the Far East run by among others Maersk Line, the world’s biggest container shipping firm. The expansion plan also involves building a new berth to handle liquid cargo. Pipavav is the first Indian port to get double stack container trains with 180 TEUs capacity.