Billionaire Gautam Adani-led Adani Ports and Special Economic Zone Ltd said Friday it will acquire a 75% stake in the Andhra Pradesh-based Krishnapatnam Port Company Ltd for an enterprise value of Rs 13,572 crore ($1.9 billion).
The deal, which marks the single-biggest acquisition by Adani Ports, will help its market share from 22% to 27%, the company said in a statement. It will finance the deal with its internal accruals and cash reserves.
Adani Ports said the acquisition is in line with its goal to double its cargo throughput by 2024-25 to 400 million metric tonnes.
The deal comes just days after its subsidiary Adani Logistics Ltd agreed to buy Snowman Logistics Ltd for Rs 296 crore last month, marking its foray into the cold-chain logistics segment.
The acquisition of Krishnapatnam Port could add to Adani Port’s current gross debt of more than Rs 31,000 crore (net debt of around Rs 22,500 crore).
However, Adani Ports said it expects the ratio of its net debt to earnings before interest, depreciation, tax and amortisation after consolidated Krishnapatnam Port to be around 3.2 in 2020-21. This is just a tad higher than the company’s net debt-to-EBIDTA ratio of 3.1 in 2018-19.
The acquisition is subject to regulatory approvals and is likely to be completed within 120 days.
The company has also bid for the debt-laden Dighi port in Maharashtra. In October, an appeals tribunal had allowed the National Company Law Tribunal to decide on Adani Ports’ bid for Dighi Port, which is being developed by Balaji Infra Projects in the Raigarh district of Maharashtra. Dighi Port entered insolvency in 2018. The other bidder for the port is the Jawaharlal Nehru Port Trust.