A Crown Jewel for APSEZ

Adani Ports and Special Economic Zone Limited (APSEZ) plans to enhance cargo volume to 100 MMT in around 7 years at Krishnapatnam Port Company Ltd (KPCL) in which it is acquiring 75% controlling stake for Rs.13,500 crore.

“KPCL is a crown jewel to join APSEZ’s string of pearls, our network of 10 economic gateways to India and this acquisition would accelerate our stride towards FY2025 vision of handling 400 MMT of cargo,” said Karan Adani, Chief Executive Officer and Whole Time Director of APSEZ.

“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,” he said. The current market share is 22% on pan-India basis.

KPCL is a multi-cargo facility which handled 54 MMT of cargo in FY19 with EBITDA of Rs.1,350 crore.

Located in the southern part of Andhra Pradesh, the state with the second largest coastline of in India, KPCL is APSEZ’s largest acquisition till date.

This acquisition will accelerate APSEZ’s stride towards 400 MMT by 2025.

“With the experience of successfully turning around acquisitions of Dhamra and Kattupalli ports, we are confident of harnessing the potential of KPCL and improve returns to stakeholders.” Adani said.

The credit metrics of APSEZ consolidated are not expected to change with this transaction. The net debt to EBIDTA of consolidated APSEZ Ltd including KPCL in FY21 is expected to be around 3.2x. (which is in line with the pre-acquisition of net debt to EBIDTA of 3.1x in FY19)

The acquisition, announced on 3 Jan 2020, is subject to regulatory approvals. The transaction is expected to be completed in 120 days. It will be funded through internal accruals and existing cash balance, said APSEZ.

Krishnapatnam port has annual revenues of about Rs.24 billion and EBITDA of Rs.13 billion. It will account for about 20% of APSEZ’s cash flows. fiinews.com