Panel examines Adani’s offer to buy 10 per cent stake in Gangavaram Port

Hyderabad: The empowered group of secretaries dealing with the divesting of 10 per cent equity in the Gangavaram Port, which held its first meeting on Tuesday,  decided to ascertain the real valuation of its stake from more than one agency.

The committee had been constituted by the Andhra Pradesh government to oversee the disinvestment in the port and the merger of Gangavaram Port Ltd into Adani Ports and Special Economic Zone by “following the available guidelines and recommendations of the SBICAP on disinvestment.”

The SBICAP had recommended that the state government should go in for disinvestment as per the guidelines of disinvestment policy of GoI for a better price discovery and negotiations.”

The APSEZ offered about Rs.645 crore at Rs.120 per share to the government on par with the price at which it bought 90 per cent stake, including 58.1 per cent from the original concessionaire D.V.S. Raju and family. The APSEZ, which enjoys the “first right of refusal” in the event of the state government selling its shares, made a suo moto offer to buy the same.

Chief Minister Y.S. Jagan Mohan Reddy reportedly decided, in principle, to sell the stake and make use of the proceeds to build the proposed ports and fishing harbours. “Per se, disinvestment is not wrong and it will be very useful for the state to fulfill its equity obligation while going for project financing,” a senior official said.

The other requests made by the APSEZ were already agreed upon by the government. These included permission to buy the stake of Private Equity Fund WarburgPincus and allowing merger of GPL into APSEZ with a rider to set up a special purpose company which will enter into a fresh concession agreement with the same terms and conditions.

Though the central guidelines suggest a bidding process for a better price discovery, the concession as well as shareholders’ agreements of GPL only talked of a willingness of both parties to transact and get a proper valuation done by the both parties as the prerequisites for share purchase or sale.

“We also should take into consideration if other players are interested in entering APSEZ with an insignificant percentage of the stake that doesn’t even confer the investor a place in the board of directors. World’s leading PE investor, WarburgPincus, got its valuation done and SBICAPS also did its own valuation,” a member of the group of secretaries said.


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