Adani Ports and SEZ, India's largest port operator, is seeking further acquisitions after taking over Dhamra port on the east coast recently.
It's looking to buy a port on the southeast coast to strengthen its presence across the country, two people familiar with the matter told The Economic Times.
It is also in talks with several international port operators to sell a significant stake in its Hazira operations in Gujarat to free up cash and get assured shipping lines that will come with such partnerships.
"Adani is rationalising its port assets in India. They will use money from Hazira to buy something in the south," said one of the people familiar with the matter.
With a strong presence on the west coast with flagship Mundra port and on the east coast with the US$917.65 million Dhamra port, the company wants to extend its reach further south.
It is more likely to buy an asset in Andhra Pradesh as its presence in Tamil Nadu is ensured after it won the bid to build a container terminal in Ennore this year. In Andhra Pradesh, Adani has a small coal-handling operation at Vizag. The company declined to comment on the story.
The ports at Krishnapatnam, Gangavaram and Machilipatnam are likely targets in Andhra Pradesh. In Tamil Nadu, Karaikal port could be a target.
The slowdown hit ports that spent thousands of crores of rupees during the boom on developing east coast facilities. Today, they are staring at unmet revenue targets, anaemic cargo growth and balance sheets weighed down by debt.
The enterprise value of these ports is in the range of $500 million to $834 million, according to industry sources. However, with more supply than demand in the region, sellers are at a disadvantage.
There are many good assets on the block on the southeast coast.
"Adanis are driving a hard bargain and are looking to buy something cost-to-cost. It is a buyer's market after all," said the same person. "Chairman Gautam Adani "is looking for value for money."
Analysts say it is comfortably placed to fund another deal. "Adani Ports will not have any problem funding another deal. They have enough cash on their balance sheet," said Vibhor Singhal, an analyst with Phillip Capital.
In Gujarat, Adani doesn’t need all of Hazira. Mundra port has a substantial amount of space for expansion, while Dahej port is a joint venture between the Adani Group and Petronet LNG. But Hazira port, a wholly owned subsidiary of Adani Ports and valued at $500 million, has not done as well as anticipated.
"They have spoken to the usual suspects: APM Terminals, Port of Rotterdam, Port of Hamburg and MSC. Some of these international port operators will not come as minority shareholders. They will help in volume support and operational support," said another person familiar with the discussions.
Hazira currently has five berths and plans to expand these to 13. Two of the five berths are dedicated to container cargo. Even though the port has not picked up since being commissioned in fiscal 2012, it has the potential to scale up fast once the hinterland around it develops.
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