Private equity firm 3i Group has invested around $161 million for a minority stake in Krishnapatnam Port Company Ltd (KPCL), promoted by the Hyderabad-based Navayuga Group. According to earlier reports this stake could be anywhere between 15-26%. The investment has been through $1.2 billion 3i India Infrastructure Fund.
Krishnapatnam is situated at a distance of 24 km from Nellore City in Nellore District, the southernmost coastal district in the state of Andhra Pradesh. KPCL has a 30-year concession to develop, operate and maintain the Krishnapatnam port, which is extendable to 50 years. Krishnapatnam port, which was inaugurated last July, is expected to handle about 100 million tonnes (mt) of bulk cargo when fully completed.
3i Infra Funds’ other investments are $227 million for a minority stake in Adani Power and $100 million in Hyderabad-based engineering and construction firm Soma Enterprises.
“Krishnapatnam Port Company provides us with an opportunity to invest in a high quality port asset being developed on the east coast of India. The port is strategically located and is being developed by a highly experienced management team,” said Anil Ahuja, Head of Asia at 3i.
According to the India’s Planning Commission, traffic at Indian ports is projected to grow to 1225 mt by 2014 from 700 mt in 2007. It estimates that the port sector requires around $20 billion in investment over the next five years.
Port sector has witnessed an interest from private equity players. Last year Warburg Pincus picked up a 30% stake in Gangavaram Port Ltd for $35 million. Gujarat Pipavav Port has raised funds from a number of investors including IDFC PE, 2i Capital, IL&FS and NYLIM Jacob Ballas.