India's Gangavaram Port plans port buys in Africa, Australia
Gangavaram Port, the owner of India's deepest seaport, is evaluating opportunities to acquire the existing operational seaports in Africa and Australia and has roped in global consultants for their help, said chairman and managing director DVS Raju, The Economic Times reports.
The port company backed by the global private equity giant Warburg Pincus views that the opportunities for developing Greenfield seaports in India are turning tough owing to issues that include environmental clearances and rehabilitation and resettlement (R&R) packages.
"We want to acquire an existing operational port and modernize it through high mechanization and operate it. We are evaluating the existing port assets in Africa and Australia," Raju told ET.
Certain private ports were available in these two continents where the existing owners were unable to pump in further funds to expand and modernize their ports and there are certain ports where the existing investors are planning to exit the assets, he said.
Further, Raju said Gangavaram Port is also talking to some of the Indian infrastructure companies that had acquired coal and other mineral assets to join hands with them to build the seaports for mineral shipments.
"We have appointed a team of our officials exclusively to evaluate the opportunities in the global markets, apart from hiring certain reputed international consultants including KPMG. Further, Warburg Pincus is also assisting us in this exercise. We have an in principle agreement with Warburg Pincus to go jointly for expanding the port business," said Raju.
Admitting that operating seaports in Africa and Australia was not an easy task, he said, "We need to study the local political, social, environmental and regulatory issues before taking a call."
Meanwhile, the port company is on the verge of finalizing tenders to award expansion works at Gangavaram port, involving an investment of Rs 1,200 crore to nearly triple the operating capacity to 45 million tonnes a year from the existing 15 million tonnes. The port now has five berths including a dedicated one for coal handling and four berths are being added by December 2013.
Raju said global tenders for the expansion project include five packages consisting of marine berths construction, dredging, railways, mechanisation and onshore civil works. "The technical and financial bids will be evaluated and works will be awarded by the month-end."
Warburg Pincus holds 30% in the port company's current paid-up equity of Rs 525 crore and the Andhra Pradesh government has 10.5% stake, while the DVS Raju family owns the balance 59.5% equity.
Raju said the company is not going to dilute equity for the proposed expansion. While Rs 300 crore will be met through the internal accruals, banks and financial institutions led by State Bank of India are extending a debt of Rs 900 crore.
Hoping that the expanded capacity will meet the growing needs of its key customers that include steel, power generation and cement companies in the region that are nearly doubling their capacities, Raju said the port will dedicate one more berth for coal handling, apart from augmenting the mechanization capacities for faster evacuation of cargo. The port's top customers include Tata Steel, SAIL, Rashtriya Ispat Nigam, Jindal Aluminium, NTPC among others.
Further, Raju said the company is also in talks with couple of leading petrochemical firms to set up a regassified liquefied natural gas (RLNG) terminal at Gangavaram port. "Discussions pertaining to modalities of partnership for the RLNG terminal are currently going on," he said.
The port company backed by the global private equity giant Warburg Pincus views that the opportunities for developing Greenfield seaports in India are turning tough owing to issues that include environmental clearances and rehabilitation and resettlement (R&R) packages.
"We want to acquire an existing operational port and modernize it through high mechanization and operate it. We are evaluating the existing port assets in Africa and Australia," Raju told ET.
Certain private ports were available in these two continents where the existing owners were unable to pump in further funds to expand and modernize their ports and there are certain ports where the existing investors are planning to exit the assets, he said.
Further, Raju said Gangavaram Port is also talking to some of the Indian infrastructure companies that had acquired coal and other mineral assets to join hands with them to build the seaports for mineral shipments.
"We have appointed a team of our officials exclusively to evaluate the opportunities in the global markets, apart from hiring certain reputed international consultants including KPMG. Further, Warburg Pincus is also assisting us in this exercise. We have an in principle agreement with Warburg Pincus to go jointly for expanding the port business," said Raju.
Admitting that operating seaports in Africa and Australia was not an easy task, he said, "We need to study the local political, social, environmental and regulatory issues before taking a call."
Meanwhile, the port company is on the verge of finalizing tenders to award expansion works at Gangavaram port, involving an investment of Rs 1,200 crore to nearly triple the operating capacity to 45 million tonnes a year from the existing 15 million tonnes. The port now has five berths including a dedicated one for coal handling and four berths are being added by December 2013.
Raju said global tenders for the expansion project include five packages consisting of marine berths construction, dredging, railways, mechanisation and onshore civil works. "The technical and financial bids will be evaluated and works will be awarded by the month-end."
Warburg Pincus holds 30% in the port company's current paid-up equity of Rs 525 crore and the Andhra Pradesh government has 10.5% stake, while the DVS Raju family owns the balance 59.5% equity.
Raju said the company is not going to dilute equity for the proposed expansion. While Rs 300 crore will be met through the internal accruals, banks and financial institutions led by State Bank of India are extending a debt of Rs 900 crore.
Hoping that the expanded capacity will meet the growing needs of its key customers that include steel, power generation and cement companies in the region that are nearly doubling their capacities, Raju said the port will dedicate one more berth for coal handling, apart from augmenting the mechanization capacities for faster evacuation of cargo. The port's top customers include Tata Steel, SAIL, Rashtriya Ispat Nigam, Jindal Aluminium, NTPC among others.
Further, Raju said the company is also in talks with couple of leading petrochemical firms to set up a regassified liquefied natural gas (RLNG) terminal at Gangavaram port. "Discussions pertaining to modalities of partnership for the RLNG terminal are currently going on," he said.
