Adani Ports buys a 95% stake in Odisha’s Gopalpur Port from SP Group for Rs. 1349 crore

On Tuesday, Adani Ports and Special Economic Zone (APSEZ), India’s top private port operator, announced plans to acquire a 95% stake in Odisha’s Gopalpur Port, bolstering its presence on the eastern coast of the country.

The equity value of the deal is estimated at ₹1,349 crore ($161.74), with an enterprise value of about ₹3,080 crore. The objective is to enhance Adani Port’s presence on the east coast.

Details of the Acquisition

Adani Ports signs agreements to acquire 56% of Gopalpur Port from Shapoorji Pallonji Group and 39% from Orissa Stevedores Ltd. The deal is subject to regulatory approvals and other conditions being met beforehand

Apart from the enterprise value, there’s a contingent payment of ₹270 crore expected to be made after 5.5 years, contingent upon meeting specific conditions agreed upon with the sellers.

“Gopalpur Port’s inclusion will expand Adani Group’s nationwide port network, balance cargo volumes between the east and west coasts, and enhance APSEZ’s comprehensive logistics strategy,” stated Karan Adani, Adani Ports’ managing director.

Gopalpur Port manages various dry bulk cargoes, such as alumina, coal, ilmenite, iron ore, and limestone.

APSEZ oversees the growth and management of approximately 12 ports and terminals spanning both the western and eastern coasts of India.

Approach to Acquisitions

Reports in early December 2023 suggested a potential deal, possibly establishing Adani Port’s sixth multi-purpose facility on the eastern coast. With a current capacity of about 247 million tonnes (MT), this acquisition would strengthen their position in the region.

Earlier reports indicated differences in valuations, as JSW Infrastructure had discussions with the SP’s Mistry family for the asset at an enterprise value of ₹3,000 crore.

According to an Economic Times report, the enterprise value of Gopalpur Port is $600-650 million (₹5,000 crore), with SP Group’s equity value estimated at $240-260 million (₹2,000 crore).

As of February 2023, credit rating agency Care Edge reported that the port had long-term bank facilities totaling ₹1,432 crore.

Significance of Gopalpur Port

Gopalpur Port, operating since 2015, mainly serves the steel industry and strategically sits between Paradip Port and Vizag Port along the Bay of Bengal. Its access to NH-516 and railway sidings linking to the Golden Quadrilateral renders it vital for cargo operations. Moreover, the port’s ability to set market rates independently, free from TAMP regulations, enables the provision of extra value-added services.

Adani Ports experienced a notable year-on-year increase in cargo volumes, reaching 101.2 MT in the second quarter, including a 24% rise in container volumes. The company has upheld its volume growth projections for FY24 and FY25, targeting 390-400 MT and 500 MT, respectively. The recent boost in its stock price, driven by favorable brokerage forecasts, reflects investor confidence in the company’s strategic direction.

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