Adani Group accelerates its ‘string of ports’ strategy

Indian billionaire Gautam Adani’s latest port acquisition not only boosts his dominant market share - it also bolsters his ‘string of ports’ plan to cover the country’s entire economic hinterland

Adani Group accelerates its ‘string of ports’ strategy
Gautam Adani's recent acquisition expands his dominant market share in Indian ports and also makes him a little bit richer. Photo: AFP

{ATF) The Adani Group, India’s biggest port infrastructure developer and logistics provider, unveiled yet another port acquisition deal on Wednesday that paves the way for the conglomerate to bolster its already expansive port presence in the country.

It also adds another milestone in its target of creating a string of ports in India to increase service coverage to the entire country’s economic hinterland.

Adani Ports and Special Economic Zones (APSEZ) Ltd claims to be India’s largest private ports and logistics company and said it was set to acquire 31.5% stake held by Windy Lakeside Investment Limited (an affiliate of Warburg Pincus) in Gangavaram Port Limited (GPL). 

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The company also said that it is in talks with the founders and family at GPL over buying their 58.1% - while the remaining stake would be held by the state government - all of which would be subject to regulatory approvals.

Windy Lakeside Investment is an affiliate of global private equity firm Warburg Pincus. APSEZ is acquiring the firm’s stake of 163 million shares at Rs120 per share, which works out to an outflow of Rs19,540 million ($267 mn) for the acquirer.

GPL, in the state of Andhra Pradesh, next to the famed port of Vizag, is the second largest non-major port in the state.

The acquisition of GPL, the 13th port to join APSEZ’s string of economic gateways across the country “is a part of our continued strategy to build out a port and logistics network that is unmatched in its ability to serve customers across the nation,” said Karan Adani, CEO and a director of APSEZ in a release.

STRATEGIC LOCATION

The location of GPL is also strategic, Adani added, and complements the recent acquisition of the port of Krishnapatnam that serves the south of state.

GPL, added Adani, holds “great potential” to complement its bulk cargo terminals with new cargo categories that the Group intends to develop.

“The port provides us great access to an adjacent hinterland that was largely untapped by APSEZ thereby placing us in a position to serve a broader set of port customers as well as expand our overall hinterland logistics footprint for a much larger base of customers," Adani said.

The GPL acquisition closely follows APSEZ’s acquisition of Dighi Port Limited (DPL for $96.5mn) in mid-February that established the company’s footprint in Maharashtra, the largest contributor to India’s GDP.

That acquisition, according to the company, positioned APSEZ to service customers in Maharashtra, which includes the highly industrial areas and development in the Mumbai & Pune regions.

MULTI-CARGO PORTS

According to its earlier announced plans, APSEZ is targeting investments of over $1.5 billion to develop multi-cargo ports “with world class infrastructure” as well as develop rail and road evacuation infrastructure for seamless and efficient cargo movement, to cash in on the economy’s gaining momentum.

“The GPL will catapult APSEZ to not only command 30% market share - with 13 ports in 12 locations across India - but it also adds another milestone to our plan of building a string of ports along the Indian coastline to increase service coverage to the entire economic hinterland of India,” a company official close to the GPL deal told Asia Times Financial.

“This will be very similar to the so-called ‘string of pearls’ that China is building along India's coastline,” added the source requesting anonymity since he is not an authorised spokesperson.

Coined by the Indian media - and never officially used by the Chinese government - “String of Pearls” refers to the network of Chinese military and commercial facilities and relationships along its sea lines, which extend from the Chinese mainland to Sudan Port.

CONTAINER FACILITIES

The line includes container facilities at some of India’s friendly neighbours like Bangladesh, and Sri Lanka, and an estranged one, Pakistan.

The GPL announcement also increased the wealth of the group’s founder, Gautam Adani, India’s second-richest man with a net worth of $32bn in Harun Global Rich List 2021.

Shares of APSEZ, on Thursday, rallied 6% to hit a new high of Rs 765.70 on the BSE in intra-day trade after the company announced the GPL deal.

Analysts believe APSEZ would be able to sustain its business momentum going forward driven by external factors like global and local growth, and internal factors like market share gains, cargo diversification, improved hinterland penetration, and cargo stickiness, among others.

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