Ascent Capital, a Bangalore-based private equity firm, has committed $30 million in Karaikal Port Pvt Ltd, two people with direct knowledge of the development told VCCircle. While the private equity firm will invest $30 million initially, the total investment in the company can go up to $40 million (Rs 200 crore), an Ascent Capital spokesperson confirmed the development to VCCircle.
Located in the Union Territory of Pondicherry, Karaikal Port, a wholly owned subsidiary of Chennai-based Marg Ltd, is a leading infrastructure and real estate developer along the Chennai IT Corridor, with interests ranging across various areas including residential projects, commercial real estate, SEZs, ports, townships, IT parks and malls.
Marg Ltd was awarded a 30-year contract in 2006 by the Pondicherry government to develop a port at Karaikal with a capacity to load 47 million tonnes. The project is being done in three phases, with an investment of Rs 3,300 crore. Karaikal Port is being developed as a lagoon-type harbour, connected to the sea by an access channel protected by short breakwaters.
Last year, IDFC Project Equity had invested Rs 150 crore in Karaikal Port Pvt Ltd. It was IDFC’s first investment in this space and came through the India Infrastructure Fund.
Karaikal Port is envisaged to have a total of nine berths, capable of handling over 50 MTPA by 2016. The port is to be developed in three phases, with the final phase getting operational in 2016. The first phase of development, completed in April, 2009, includes two Panamax-size general cargo berths. The port hosts various other infrastructural facilities, such as covered warehousing, open storage and mobile harbour cranes.
The total investment in the project, for all three phases, is expected to be around Rs 4000 crore. Once functional, the port will also ensure employment for more than 10,000 people, directly and indirectly.
As the Indian trade and GDP pick up in the backdrop of a recovering economy, the demand for port capacity is expected to rise. The Planning Commission of India estimates that the port sector requires around $20 billion in investment over the next five years. Indian ports have been steadily attracting investor interest and several PE firms have already invested in this space. However, project equity investment is different as it has lower risks and stable predictable returns 3i Group, which manages a $1.2 million India-focused infrastructure fund, has invested around $161 million in Krishnapatnam Port Company Ltd and another $50 million in Mundra Port and Special Economic Zone. Gujarat Pipavav Port has also raised funds from a number of investors, including IDFC Private Equity, IL&FS and NYLIM Jacob Ballas. Another player who has raised money is Gangavaram Port Ltd; it got $35 million from Warburg Pincus.
Ascent Capital, advised by Ascent Advisors India Pvt Ltd, an independent investment entity formed by the former UTI Ventures team, raised Ascent India Fund III with commitments of $350 million in February last year. The private equity firm focuses on growth capital investments and follows a sector-agnostic approach. The total assets under management by the mid-market private equity firm are about $600 million.
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