Billionaire Gautam Adani-led Adani Ports and Special Economic Zone (APSEZ) on Friday said it will acquire a majority stake in Krishnapatnam Port Company (KPCL) from Hyderabad-based CVR Group for Rs 13,572 crore. "The company intends to acquire 75 per cent stake of Krishnapatnam Port Company Limited from its existing shareholders," Adani Ports said in a filing to the Bombay Stock Exchange.
KPCL is engaged in the business of handling containers, coal, break bulk and other bulk cargo including liquid cargo. It is a multi-cargo facility and handled 54 million metric tonnes (MMT) of cargo in the financial year 2018-19. The revenue for FY19 was Rs 2,394 crore.
The acquisition value of KPCL is approximately Rs 13,500 crore. The purchase consideration will be funded through internal accruals and existing cash balance, it said. The acquisition, which is subject to regulatory approval, is expected to be completed within 120 days.
Adani Ports said that the investment is in line with the company's strategy to increase its footprint in Andhra Pradesh, adding that this acquisition will accelerate APSEZ's stride towards 400 MMT by 2025.
"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 (which is in line with the pre-acquisition of net debt to EBIDTA of 3.1x in FY19)," said Adani Ports.
Commenting on the development, Karan Adani, Chief Executive Officer and Whole Time Director of APSEZ said, "...this acquisition would accelerate our stride towards FY25 vision of handling 400 MMT of cargo. Given the best-in-class infrastructure and the distinct hinterland catered by KPCL, this acquisition will not just increase our market share to 27 per cent but also add remarkable value to our pan-India footprint."
Adani added that APSEZ will target to enhance cargo volume at KPCL to 100 MMT in around 7 years and will double its EBIDTA in around 4 years through its process improvements and industry best practices.
Last week, the company had forayed into cold chain logistics by acquiring 40.25 per cent stake in Snowman Logistics for Rs 296 crore.
Ahead of the announcement, shares of Adani Ports closed Friday's trade at Rs 382.70, down 0.20 per cent, on the BSE.
By Chitranjan Kumar