The Indian port and shipping sector will see increased merger & acquisitions activity in the near future, according to Ernst & Young.
The consolidation in the liner and terminal operators is on a rise and instead of greenfield acquisitions of assets, inorganic growth through acquisition of terminal operators would be seen, E&Y said in its report.
Rajesh Samson, associate director, E&Y, said, “Acquisitions in the coming days will be directed in two ways; local developers holding state government concessions may induct strategic investments and partnerships from large Indian and global developers. We may also see buyouts of existing terminals by financial investors especially global infrastructure funds.”
Reliance Logistics buying 51% stake in Rewas Port in Maharashtra saw the beginning of private parties acquiring majority stakes in ports developed with state government concession in 2006.
Later, Chennai Container Terminal Pvt Ltd saw private equity firm Global Infrastructure Partners taking a minority 25% stake while Singapore company PSA acquiring 49% stake in ABG Kandla Container Terminal.
Financial investors buying out terminals is yet to start, however, it has been learnt that investors like Goldman Sachs are interested to invest into India. Goldman Sachs, along with GIC, acquired Associated British Ports UK for $5.3 billion in 2006.
This trend has just started in the highway projects in India, where financial investors such as Goldman Sachs Ltd, Babcock and Brown are in talks to acquire the highways from the developers.
Source: Sify