Adani Ports and Special Economic Zone (APSEZ), an arm of the Ahmedabad-based Adani Group, has agreed to acquire entire stakes of engineering and construction major Larsen & Toubro (L&T) and Tata Steel in Dhamra Port Company Limited (DPCL) for an enterprise value of Rs 5,500 crore (around $933 million).
The deal is said to be the largest in port sector in India after APM Terminals Management BV bought Pipavav port in Gujarat from SKIL Infrastructure in 2005.
Located in Odisha, Dhamra Port is a deep draft, all weather multi-user port and a 50:50 joint venture of Tata Steel and L&T Infrastructure Development Projects Ltd (L&T IDPL), a subsidiary of L&T. The port started operations in May 2011 and handled a total cargo of 14.3 million tonnes in the fiscal ended on March 31, 2014. The Odisha government had awarded the port in 2004 to be developed and operated for 30 years.
L&T IDPL obtained approval from its board for the divestment of its equity holding in the JV at an attractive valuation.
“The Dhamra port acquisition gives us an opportunity to replicate the development and phenomenal growth of the Mundra port on the eastern coast and thereby continue to execute on our pan-India strategy” Gautam Adani, chairman of the Adani Group, said in the statement.
With the stake acquisition, Adani Group will now kick off second phase of development within 90 days and complete the same in 30 months. The continued expansion of the group will help it exceed the 100 million tonnes of cargo capacity by the end of 2020, the company said in the statement.
The transaction is, however, subject to customary conditions, including third-party approvals, the statement showed.
Amarchand & Mangaldas & Suresh A Shroff & Co is the legal advisor to APSEZ on this transaction.
(Edited by Joby Puthuparampil Johnson)