Adani Ports to buy majority stake in Shapoorji Pallonji’s Gopalpur Port for around ₹1,349 crore

Adani Ports: India's leading private port operator, Adani Ports and Special Economic Zone (APSEZ) on Tuesday said it is looking to acquire a 95% stake in Odisha's Gopalpur Port, strengthening its presence along the country's eastern coast.

The equity value of this deal has been pegged at ₹1,349 crore ($161.74), while enterprise value of the transaction amounts approximately ₹3,080 crore. The move is aimed at strengthening Adani Port's presence along the east coast, it added.

Acquisition Details

Adani Ports has signed definitive agreements to purchase a 56% stake in Gopalpur Port from real estate conglomerate Shapoorji Pallonji Group (SP Group) and another 39% from Orissa Stevedores Ltd (OSL). The transaction is subject to statutory approvals and fulfilment of other conditions precedents.

In addition to the enterprise value there is a contingent consideration of ₹270 crore estimated to be payable after 5.5 years, subject to fulfilment of certain conditions as agreed with the sellers.

"GPL (Gopalpur Port) will add to the Adani Group's pan-India port network, east coast vs west coast cargo volume parity and strengthen APSEZ's integrated logistics approach," said Karan Adani, managing director at Adani Ports.

Gopalpur Port handles a diverse range of dry bulk cargo, including alumina, coal, ilmenite, iron ore and limestone.

APSEZ is responsible for the development and operation of around 12 ports and terminals across both the west and east coasts of India.

Acquisition Strategy

Hints of the deal were also reported in early December 2023, for what could potentially become Adani Port's sixth multi-purpose facility on the eastern coast. With an existing capacity of around 247 million tonnes (MT), this acquisition would further solidify their presence in this region.

Reports had then suggested a divergence in valuations, with JSW Infrastructure previously in talks with the SP's Mistry family for the same asset at an enterprise valuation of ₹3,000 crore.

The enterprise value of Gopalpur Port stands at $600-650 million ( ₹5,000 crore), with SP Group's equity value estimated at $240-260 million ( ₹2,000 crore), as per an Economic Times report.

According to credit rating agency Care Edge, the port's long-term bank facilities stood at ₹1,432 crore as of February 2023.

Strategic Importance of Gopalpur Port

Gopalpur Port, operational since 2015, caters primarily to the steel industry and is strategically located along the Bay of Bengal between Paradip Port and Vizag Port. Its connectivity to the Golden Quadrilateral via NH-516 and railway sidings makes it a pivotal facility for cargo handling. The port's flexibility in charging market rates without TAMP regulations allows for additional value-added services.

Adani Ports has seen a significant year-on-year rise in cargo volumes, totalling 101.2 MT in the second quarter, with container volumes increasing 24%. The company has maintained its volume growth guidance for FY24 and FY25, aiming for 390-400 MT and 500 MT, respectively. The recent surge in its stock price following positive brokerage outlooks is indicative of investor confidence in the company's strategic trajectory.