MUMBAI: India’s first private port, also one of its top five, is up for grabs. APM Terminals, the controlling shareholder, manager and operator of Gujarat Pipavav Ports Ltd (GPPL) is looking to exit its 12-year flagship investment as it no longer fits in with its core global business strategy. It has mandated HSBC to run a formal sale process and find a new buyer, said multiple sources aware of the development. Global and local rivals and infrastructure-focused conglomerates such as JSW Group, Adani Ports and Dubai’s DP World are believed to have been approached, and initial diligence has begun, said the sources cited above. Some long-only pension and sovereign wealth funds and infrastructure private equity funds too have been sounded out. The Hague, Netherlands-headquartered APM Terminals is the independent ports and terminals arm of Danish maritime giant A.P. Moller-Maersk Group. It owns 43.1% of GPPL and as per Tuesday’s market capitalisation, the European firm’s stake is valued at Rs 2,985 crore. As per rules, the buyer will also need to make a mandatory open offer to minority shareholders for an additional 26%.
The current market capitalisation of GPPL is Rs 6,978.46 crore. Refusing to comment on “market rumours and speculation”, a company spokesperson told ET, “APM Terminals’ strategy is to continuously review and optimise its existing global portfolio as well as explore new investment opportunities. We are always looking at opportunities to grow the business and improve shareholder value.” Aspokesperson for Gujarat Pipavav declined to comment while JSW did not respond to ET’s email. A DP World spokesperson said the company had not been approached. APM acquired 47% stake in the port from Nikhil Gandhi’s SKIL Infrastructure for about Rs 200 crore in 2005 and subsequently listed the company. The European shipping giant counted the investment as part of its major entry into India.
Located in Saurashtra, Gujarat, the port handles bulk, container and liquid cargo, and is spread over 1,560 acre. The company reported a 33% increase in net profit for the January-March quarter at Rs 66 crore compared with last year. Total revenues were up 8% at Rs 174.6 crore while EBITDA (earnings before interest, tax, depreciation and amortisation) was up 16% at Rs 114.7 crore. In FY17, the company posted a net profit of Rs 250 crore on revenue of Rs 683.10 crore. “Ontop of a strong business performance, GPPL offers a rare mix (at least in the Indian infrastructure space) of a transparent business model, clean and healthy cash flows, net cash balance sheet and very high dividend payout. GPPL is well placed to leverage on the long-term growth in container trade in India’s ports. The port has ample capacity, and approvals are in place for additional expansion if warranted by demand,” argued analysts from Citi in a research note on May 11.
