Adani Group buys port in Australia for Rs8,750 crore

The Ahmedabad-based Adani Group has acquired an Australian port, Abbot Point Coal Terminal (APCT), for Australian $1.8 billion (Rs8,750 crore).

The port in the Queensland state is operational with capacity of 50 million tonnes (mt). Adani Group’s Mundra Port & Special Economic Zone (MPSEZ), which has market capitalisation of around ¤27,800 crore, has won the bid and acquired the port in three stages in six months.

The deal was signed in Brisbane, Australia, between the company officials and the Queensland government on Tuesday. Queensland has declared MPSEZ as the successful bidder for long-term lease of APCT following international competitive bidding. The international bid attracted local and foreign companies and passed through three distinct stages of selection lasting over six months.

“Right now, we are owner of the port but operations of it are already given to some other company, whose tenure will last in 2015. Till than, if we want, we can add up capacity by 30 mt and increase the total capacity to 80 mt in next three to four years,” said chief financial officer, B Ravi, MPSEZ Ltd.

For next five years, the coal supply from APCT is already booked by other customers. “Hence, till 2015 Adani Group may not be able to use the port to fulfil its own purpose. The operator already has bookings for next five years. In case, any customer cancels the order than we can start supplying coal from APCT to India for our own purpose,” he said. The acquisition is partly funded through debt and a small portion of equity from MPSEZ.

The company will borrow $2 billion from Standard Chartered Plc to pay for the port acquisition, Ravi told Bloomberg.
Analysts see the buy as a positive for the company.
“It is a very positive move for the company and a good thing in the long term,” said Kapil Yadav, analyst with Dolat Capital.

About APCT, Ravi said it is profit making port. “We are expecting that ACPT will have revenues of A$110 million in 2011 with earnings before interest, tax, depreciation and amortisation of A$59 million. The Ebidta margin of the port was 54% in the previous fiscal and we are expecting it to increase to 70% in 2016 when expanded facilities are fully utilised. It would then have revenues of A$305 million and Ebidta of A$213 million in 2016,” he said.

Adding up capacity may cost another A$600 million at APCT. “We have plan to increase the coal handling capacity, which may cost around A$600 million. The present capacity of 50 million tonnes will increase by 30 mt to 80 mt in next three years. Once the capacity is added, we will consume all the supply of 30 mt of coal for our power plants,” said Ravi.

Adani Group has acquired coal mine in Australia and also it is developing another port which is a greenfield project. “The coal mine is expected to start production in next three years and by that time, probably, we might have increased the handling capacity 60% at APCT,” he said.

The port is expected to get assured supply as Adani also owns a coal mine in Australia. “The terminal will mean a good support to the group's mining activity, while the mine will offer assured volumes for the proposed terminal,” said an analyst from a domestic brokerage firm. On the valuations side, the analyst said, “It is higher than what the street expectations which were at around A$1.5 billion, but given it was a very competitive bid the company must have bid higher.”