AP likely to offload 10% stake in GPL

Adani already holds 90% in Gangavaram port, keen on govt equity

SOURCES TOLD this correspondent that the Cabinet which would meet on Tuesday would grant in-principle approval for the disinvestment. The government had already constituted a three-member high-level official committee to examine Adani’s offer.

The Andhra Pradesh government has in principle decided to divest its 10 per cent equity in Gangavaram port even as its approval of Adani’s acquisition of the remaining stake ran into rough weather.

Adani group has recently acquired about 90 per cent stake in the port and offered to buy the remaining also, which is owned by the government. However, the infra major’s proposal to merge the Gangavaram Port Limited (GPL) into its Adani Ports and Special Economic Zone (APSEZ) may not be approved by the government.

Sources told this correspondent that the Cabinet which would meet on Tuesday would grant inprinciple approval for the disinvestment. The government had already constituted a three-member high-level official committee to examine Adani’s offer.

Once the cabinet clears the disinvestment, the government would explore the possibilities of fetching maximum revenue out of the equity sale. Sources said Adani offered the same price for which he bought 58.1 per cent equity from original promoter D.V.S. Raju and his family and 31.5 per cent from a global private equity firm Warburg Pincus. As per Adani’s valuation, the state will get around `645 crore.

“We will engage a professional agency to come up with its own valuation and in all probability will go for tender,” sources said, adding that the Adani group, which will have first right of refusal, will be asked to match the highest amount offered in the bid.

The government is of the view that the amount accrued out of sale of its equity could be used for other infra projects including Ramayapatnam. “The previous promoters started paying dividend only after the company became debt-free just a couple of years ago and the dividend would stop as Adani will anyway raise debt for the expansion,” sources said, justifying the disinvestment move. The government would continue to get 2 per cent share in gross revenue and lease rentals on land, they added.

Meanwhile, the government is likely to raise objections over Adani’s proposal to merge GPL into APSEZ. “We can’t approve the merger because we still have a stake. Secondly, even after the sale of our stake, we should get revenue on gross sale and lease rental for which continuation of GPL as a separate entity is essential,” sources said, adding that the same would be communicated to Adani.