Financial Daily from THE HINDU group of publications
Monday, Jul 05, 2004
Logistics - Mergers & Acquisitions
Maersk may buy out Sea King, PSA in Gujarat Pipavav Port
Mumbai , July 4
PORT of Singapore Authority (PSA) is likely to exit from Gujarat Pipavav Port Ltd (GPPL) by selling out its 20 per cent ownership to Maersk, a fellow shareholder here but bitter rival elsewhere.
According to a source, Maersk India is planning to buy out the original promoters Sea King Infrastructure Ltd's 16 per cent stake as well as Port of Singapore Authority's 20 per cent ownership in the company that operates the port and container terminal on the Saurashtra coast at about Rs 40 per share.
PSA had bought the stake at about Rs 54 per share, the source added. After its exit from GPPL, PSA's presence in India would be confined to the Tuticorin port.
Maersk India is the wholly owned subsidiary of Danish major A.P. Moller Group, which operates the world's largest container line.
It recently won the right to operate the third container terminal at the Jawaharlal Nehru Port near Mumbai defeating PSA, United Liner Agency and CMA-CGM in a fiercely fought global tender. With a near-majority ownership in GPPL, Maersk would control the handling of more than half of the containers that arrive on the West coast.
A shipping analyst said it makes good business sense for Maersk to have more control over GPPL, now that it has bagged the third terminal at JN Port. "Apparently, Maersk is duplicating what P&O Ports did after it bagged the second terminal at JN Port, it bought Mundra. Similarly, Maersk wants to control Pipavav so that the two terminals complement each other's traffic flow," the analyst pointed out.
Mr Bhavesh Gandhi, Vice-President, Sea King Infrastructure, confirmed that Maersk is indeed buying his firm's equity ownership. Mr Gandhi said the deal is likely to be wrapped up by the end of the month. He, however, declined to share any valuation details.
Mr Gandhi had told a Web Site in March that India Development Fund, managed by IDFC will invest around Rs 125 crore, and insurer New York Life will bring in around Rs 50 crore for minority stakes.
The source said a newly raised private equity fund, Leverage India Fund, managed by IL&FS Investment Managers is also looking at picking up a small holding in the company.
Container Corporation of India (Concor), which has tied up with Maersk to develop and operate the Rs 1,000-crore third container terminal at JN Port, is also said to be keen on buying an equity stake in GPPL.
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