Essar Ports set to strike deal with Port of Antwerpen
Essar Ports is setting its sights high. The company has announced a potential stake sale deal with one of Europe’s largest ports, which is set to be concluded within the next two months, as well plans for the company to become a big name in the container terminal business in India, Port Technology reports.
The Ruia family-promoted company, which operates port facilities at Hazira, Salaya, Vadinar and Paradip, is looking to the Port of Antwerp for fresh investments.
“Talks are on at the moment, and we are likely to see it conclude in the next two months.” Essar Port’s managing director Rajiv Agarwal said.
“Port of Antwerp is looking to invest in India. They see potential in us, and we thought it would be worthwhile.”
A source close to the development revealed that the Port of Antwerp is likely to invest around $25-50 million for a less than 10 percent stake in Essar Ports.
The collaboration with Antwerp is not new; last year Port of Antwerp signed a memorandum of understanding with Essar Ports to provide advisory and consultancy services, investment, training and agreed to enhance commercial relations in India and abroad.
This latest news comes amidst Essar’s ambitious plans for expansion. The company has been involved in liquid and bulk cargo business; however the Indian Central government’s offer to award more than 25 port projects in the current fiscal year has provided Essar Ports with an opportunity to step into the container terminal business.
“As far as containers are concerned, we will definitely look for tie-ups since we do not have the necessary expertise. In future, we will definitely do container business,” Agarwal revealed.
The company’s venture into container terminals has already begun. Essar Ports, along with Adani Ports, are currently awaiting a compulsory security clearance before beginning bidding for a mega container terminal in Chennai.
“Essar Ports is looking to increase capacity to 158 million tonnes from 88 million tonnes, and they will need more funds if they have to complete another 50 percent of the capacity,” said a financial analyst who tracks the company.
“It is always good to raise money through stake sale since that helps their debt equity ratio. They will able to raise more money through debt in such a scenario.”