Adani to buy Australia's Abbot Point for $2 bln

Adani Enterprises has agreed to buy Abbot Point Coal Terminal in Australia for $2 billion in an all-cash deal to tap into growing coal traffic in overseas markets, a unit of the Indian firm said on Tuesday.

Indian firms are eyeing coal assets overseas to supply power plants in India, looking to benefit from the energy-hungry nation's aim to halve its nearly 14 percent peak-hour power deficit within two years

The Abbot Point Coal deal is one of the largest acquisitions of an Australian asset by an Indian company since Adani acquired Linc Energy's Galilee coal project for $2.7 billion last August. 

Analysts said the acquisition of the terminal by Mundra Port and Special Economic Zone, the port operating arm of Adani, would help Adani ship coal from Galilee to its power plants in India and tap into the growing coal cargo in the region. 

"It's a good deal for Mundra Port as the Abbot Point terminal will have assured cargo from Adani's own mine there as well as other coal mines in the region," said Kapil Yadav, a sector analyst with Mumbai brokerage Dolat Capital.

"The deal will have an impact on the company's balance sheet in the near term due to the debt taken for this," he added.

Mundra Port's chief financial officer B. Ravi said the company had arranged short term mezzanine debt to fund the deal and said Standard Chartered was arranging the debt. He did not disclose the amount.

India holds 10 percent of the world's coal reserves, but a shortfall in local supplies has grown rapidly because of an increase in coal-fired power plants. The country is likely to import 135 million tonnes of coal in the fiscal year that began on April 1.

Shares in Mundra Port, which has a market value of $6.5 billion, were trading down 2.5 percent at 140.1 rupees at 0725 GMT, while Adani Enterprises shares were trading up 0.6 percent at 632.6 rupees in the Mumbai market that was down nearly 1 percent.


Mundra Port said the coal export port sold by the government of the state of Queensland is expanding to increase capacity to 50 million tonnes per year from about 20 million tonnes now.

There is room to increase the port's capacity to 80 million tonnes, Mundra Port said in a statement. The unit is India's largest private port operator and handles 50 million tonnes of cargo annually.

Abbot Port is expected to generate revenue of A$110 million ($120.3 million) in 2011, growing it to A$305 million in 2016, Mundra Port said.

Sources familiar with the deal had told Reuters earlier that Adani, which was competing with Australian mining tycoon Nathan Tinkler, had won the bidding. 

Located in North Queensland in Australia, the Abbot terminal services three mines in the Bowen Basin. The state of Queensland is selling the terminal as part of a A$15 billion infrastructure privatisation programme.

The Queensland government has already raised at least $6.3 billion from the sale of the Port of Brisbane and the $4 billion float of rail freight business QR National Ltd.

"The (Abbot) transaction has delivered proceeds well above initial expectations of $1.5 billion," Queensland Premier Anna Bligh said in a statement.

Bank of America Merrill Lynch advised the Queensland government on the deal. Mundra Port's Ravi said the company did not use external advice for the acquisition.

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