Mumbai: Adani Ports and Special Economic Zone Ltd (APSEZ), India’s largest private sector port operator, has agreed to buy a 75% stake in Krishnapatnam Port Co. Ltd (KPCL) at an enterprise value of ₹13,500 crore, APSEZ said on Friday.
The Krishnapatnam Port is located in southern Andhra Pradesh and is a multi-cargo facility. It handled 54 million tonnes (mt) of cargo in the year ended 31 March 2019.
The purchase will accelerate Adani Ports’ plan to expand its cargo-handling capacity to 400mt by 2025. The acquisition will be funded via internal accruals and existing cash balance, the company said.
“The credit metrics of APSEZ consolidated are not expected to change with this transaction. The net debt-to-Ebidta of consolidated APSEZ, including KPCL, in FY21, is expected to be around 3.2x. (in line with the pre-acquisition of net debt to Ebidta of 3.1x in FY19)," it added. Ebitda refers to earnings before interest, taxes, depreciation and amortization.
The acquisition is subject to regulatory approvals and the transaction is expected to be completed within 120 days.
“Given the best-in-class infrastructure and the distinct hinterland catered by KPCL, this acquisition will not just increase our market share to 27%, but also add remarkable value to our pan-India footprint," said Karan Adani, CEO, Adani Ports.
“With the experience of successfully turning around acquisitions of Dhamra and Kattupalli ports, we are confident of harnessing the potential of KPCL and improving returns to stakeholders."
Adani said APSEZ will look to expand cargo volume at KPCL to 100mt in around seven years and will double its Ebidta in about four years.
This is the second acquisition by Adani Ports in the past seven days. On 27 December, Adani Ports said it had acquired a majority stake in Snowman Logistics Ltd for ₹296 crore to foray into cold chain logistics.
Adani Logistics Ltd, a wholly-owned unit of Adani Ports, will buy a 40.25% stake in Snowman from Gateway Distriparks Ltd. Snowman is market leader in cold chain logistics with over 30% share among integrated organized cold chain service providers in India.