Adani set to buy GMR Group's greenfield port and SEZ in Kakinada
23 January 2020
Adani Ports and Special Economic Zone Ltd (APSEZ) is set to acquire greenfield commercial port in Kakinada and the adjoining SEZ located at Kona village in Thondangi mandal of East Godavari district, which is being constructed by promoter GMR Group.
According to a report in the Hindu BusinessLine, APSEZ will take over the port and the SEZ fully from the GMR Group. It did not ascertain the value of the deal. The development of the port, including break water construction, channel and berths, is estimated to cost more than Rs2,500 crore.
This is Adani group’s second port acquisition in the eastern coast after the acquisition of a 75 per cent stake in could be APSEZ’s second big acquisition of the Krishnapatnam Port Company Ltd, the entity that runs a private deep-water port at Krishnapatnam in Andhra Pradesh’s Nellore district, for an enterprise value of Rs13,500 crore.
The purchase price of the Krishnapatnam Port Company comprises an equity portion of the Rs7,500 crore and a debt component equalling Rs6,000 crore, according to the report.
Besides the twin acquisitions, APSEZ operates a dry bulk cargo handling terminal at the central government-owned Visakhapatnam Port Trust.
The acquisition of the upcoming Kakinada Port and the SEZ would strengthen APSEZ’s portfolio along the eastern coast where it operates ports and terminals — Dhamra in Orissa, Kattupalli and Kamarajar in Tamil Nadu and Krishnapatnam in Andhra Pradesh.
Barring its Vizag facility, where the tariffs are regulated by the rate regulator for major port trusts, the remaining facilities have freedom to set rates based on market forces.
Kakinada Gateway Port Ltd, a unit of GMR Infrastructure-promoted Kakinada SEZ Ltd, has been authorised by the Andhra Pradesh government to build and run a greenfield commercial port for a concession period of 30 years, which can be extended by 20 years.
The deal is expected to be announced after the two sides work out an arrangement to comply with the share lock-in clauses stipulated by the concession agreement for the original promoter (GMR).
The Kakinada SEZ industrial park is strategically located on the Vizag-Chennai Industrial Corridor in East Godavari district and offers approximately 8,521 acres of industrial land, while the commercial port spread will be developed over 1,811 acres.