3i invests $161m in Krishnapatnam Port Company Ltd

3i India Infrastructure Fund (“the Fund”), an investment fund established by international private equity firm 3i Group (“3i”), has invested around US$161 million for a minority stake in Krishnapatnam Port Company Ltd (“KPCL”), promoted by the Hyderabad-based Navayuga Group.

KPCL has been awarded a 30-year concession (extendable to 50 years) to develop, operate and maintain the Krishnapatnam port. The port is a natural, deep water, all-weather port with 12 km of quays in the state of Andhra Pradesh, on a landlord port model. Inaugurated last July, the port is expected to handle about 100 million tonnes (mt) of bulk cargo when fully completed.

The port sector in India is expected to grow strongly in the coming years, driven by the country’s rapidly growing international trade and current port capacity constraints. According to the India’s Planning Commission, traffic at Indian ports is projected to grow to 1225 mt by 2014 (from 700 mt in 2007). It estimates that the port sector requires around US$20 billion in investment over the next five years.

Anil Ahuja, Head of Asia at 3i, commented on the transaction: “Krishnapatnam Port Company provides us with an opportunity to invest in a high quality port asset being developed on the east coast of India. The port is strategically located and is being developed by a highly experienced management team.  The investment gives us an opportunity to partner again with the Navayuga Group, which has successfully commissioned the port within a record time of 18 months.”

Mr C. V. Rao, Chairman of the Navayuga Group, said: “The Krishnapatnam port will have best-in-class infrastructure including a deep draft, adequate land area and excellent road and rail connectivity. We regard 3i as a strong partner which understands the local infrastructure space and offers us a wide global network of contacts and experience. 3i co-operated closely with us to complete the transaction in a short time frame. We will work closely with 3i towards building out our business strategy and delivering our plans.”

Cressida Hogg, Managing Partner of 3i’s infrastructure business, added: “This third investment by the Fund demonstrates the excellent opportunities available to investors in the rapidly expanding Indian infrastructure sector. Our partnership with Navayuga underlines our commitment to investing in high-quality infrastructure assets alongside the most experienced and reputable partners.”

The US$1.2 billion 3i India Infrastructure Fund is building a balanced portfolio of investments spanning the asset lifecycle. The Fund is managed by 3i’s global infrastructure investment team, which combines long-standing international expertise with a strong local presence.