Ahmedabad, 30 January 2022 : Adani Ports and Special Economic Zone Ltd’s (APSEZ)composite scheme of arrangement to acquire Sarguja Rail Corridor Pvt Ltd (SRCPL)has been approvedby the Ahmedabad Bench of the National Company Law Tribunal (NCLT) and will be effective from the Appointed Date of 1 April 2021.
APSEZwill nowconsolidate all rail assets under a single business entity – Adani Tracks Management Services Pvt Ltd – creating considerable value for all stakeholders from day one, as it aligns with APSEZ’s vision of being a leader in the Transport Utility space.
This consolidation allowsAPSEZ, which is targeting 2000 km of track length by 2025, to participate in Indian Railways PPP projects without having to compete with similar businesses in the Adani portfolio, a position that is in full alignment with the equity interestsof minority shareholders.
Mr Karan Adani, CEO and Whole Time Director of APSEZ said, “As per the national rail plan 2020, Indian Railways will invest more than INR 3 Lakh Crore over the next 10 years to construct new rail lines. Further, the government’s shift in focus from road to rail as the preferred mode of transport, an obvious choice both economically and environmentally, will require significant participation of the private sector. Therefore, this acquisition creates significant business value for APSEZ as a Transport Utility.”
“The process adopted by APSEZ to acquire SRCPL from another entity within the Adani Group,” added Mr Karan Adani, “reflects our continuous commitment to enhancing our corporate governance practices. The strongest endorsement of the process lies in the overwhelming support it received from our minority shareholders, reaffirming their confidence in APSEZ’s management.”
The acquisition being a related party transaction, APSEZ adopted a fully transparent approach with minority shareholders and creditors for approval. Some of the key steps in the approval process included:
- Proposal evaluation by an Executive Committee (EC) of three independent board directors
- Independent asset valuation (by Deutsche Bank and BDO Valuers) and ‘fairness opinion’ from JP Morgan and JM Financialon the valuation
- Post NOC from the stock exchanges, an application was filed for anNCLT-convened meeting of APSEZ’s equity shareholders and secured andunsecured creditors, to vote on the proposal
- Over 92% of minority shareholders and close to 100% of debtors voted in favour of the proposal
- NCLT,after reviewingthe outcome, has approved the composite scheme
- The other Conditions Precedent are to be completed and the Scheme shall become effective on the completion of all the conditions set out in the Scheme
Investment Case
- The acquisition of Surguja Rail will create value for all stakeholders from day one, as it is EPS accretive.
Significant growth opportunity available as the business is yet to mature, including in non-Adani mine areas with annual potential of up to 40 MMTPA.
- Critical and environment-friendly transport infrastructure will help decarbonize the mineral transport sector.
- Secured long-term contract with sovereign equivalent counterparty providing annuity like returns.
