MUMBAI: Adani Ports has held preliminary talks with Warburg Pincus about purchasing the private equity firm’s shareholding in the Gangavaram Port in Andhra Pradesh, two people familiar with the matter said.
Pincus, which holds 31.5 per cent in the port, approached Adani Ports and Special Economic Zone with a proposal some time back. The talks have begun but it is too early to tell, one of the people close to the discussions said. Investment bank Macquarie Capital is Adani Ports’ advisor.
Gangavaram was developed by Andhra industrialist DV Raju and is the state’s third-biggest port after Visakhapatnam and Krishnapatnam. Raju holds the majority in the firm and Pincus bought a stake in 2007.
An Adani Ports spokesperson declined to comment while Gangavaram Ports denied there was any attempt by the promoter to sell stake in the firm. Warburg Pincus did not reply to an email questionnaire on the issue.
The Gautam Adani-led Adani group has been aggressively scaling up capacity in the past few years. Adani Ports bought a port owned by L&T and Tata SteelBSE 0.14 % and now wants to expand further on the south-east coast. It now operates eight terminals and ports from just one in 2011 and has advanced its target of handling 200 million tonne of cargo by 2017 from the earlier 2020.
A second port on the east coast would strengthen Adani’s port operations and bring its capacity closer to the public sector ports who have been the mainstay of India’s port and cargo operations for many decades. All government-owned ports together handle about 800 million tonne of cargo, while Adani handles about 145 million tonne now. But its capacity is much bigger, about 315 million tonne.
Gangavaram’s capacity is about 30 million tonne but it has an advantage in that as it is one of the deepest allweather ports in the country and is strategically located near a large industrial belt in the hinterland including steel plant of Rashtriya Ispat Nigam. It is located just 15 kilometres away from its closest rival and government-owned Visakhapatnam Port, which is already falling short of capacity.
The port, which commenced operations in April 2009, is in the process of increasing its cargo capacity to 42 MT per annum (MTPA) from 24 MTPA now. It handles a variety of cargoes including coal, iron ore, food-grains and fertilisers. Chairman and Managing Director Raju won the concession agreement in 2002 to build and and operate the port for 30 years.
