Adani Ports & Special Economic Zone Ltd · NSE:ADANIPORTS

Adani Ports & Special Economic Zone — Merger or Acquisition (July 2022)

41 slides from Adani Ports & Special Economic Zone's merger presentation, Jul 29, 2022

  1. Slide 1: Acquisition of Haifa Port Company, Israel

    Acquisition of Haifa Port Company, Israel Investor Presentation July 2022

  2. Slide 2: Contents

    Contents A Group Profile B Company Profile C Haifa Port Company (HPC) – Company Profile and Acquisition Case 2

  3. Slide 3: A Group Profile

    A Group Profile STRICTLY CONFIDENTIAL

  4. Slide 4: Adani: A World Class Infrastructure & Utility Portfolio

    Adani: A World Class Infrastructure & Utility Portfolio ~USD 206 bn1 Combined Market Cap Infrastructure Portfolio Incubator Energy & Utility Transport & Logistics Direct to consumer Other businesses (74.9%) (61.3%) (74.9%) (65%) (100%) (44%) AGEL ATL APSEZ AWL AEL NQXT2 Renewables T&D Ports & Logist

  5. Slide 5: Adani: Decades long track record of industry best growth rates across sectors

    Adani: Decades long track record of industry best growth rates across sectors Port Cargo Throughput (MMT) Renewable Capacity (GW) Transmission Network (ckm) CGD7 (GAs8 covered) 45% 12% 132% 18% 3.4x 5x 3x 30% 1.5x 4% 6% 25% Industry Adani APSEZ Industry AGELAdani Industry ATL Industry AGL 2014 972 M

  6. Slide 6: Adani: Repeatable, robust & proven transformative model of investment

    Adani: Repeatable, robust & proven transformative model of investment Phase Development Operations Post Operations Origination Site Development Construction Operation Capital Mgmt • Site acquisition • Engineering & design • Redesigning the capital structure Activity • Analysis & market • Life cycle

  7. Slide 7: B Company Profile

    B Company Profile STRICTLY CONFIDENTIAL

  8. Slide 8: APSEZ: Transformational Business Model

    APSEZ: Transformational Business Model Ports Logistics SEZ • National footprint with 12 ports • Largest integrated logistics player in • Large scale ‘ready to setup’ industrial across the coastline, de-risks the India land (SEZ) Development portfolio of concentration risk. • Rail, MMLPs, Warehousing

  9. Slide 9: APSEZ: A transport utility with string of ports and integrated logistics network

    APSEZ: A transport utility with string of ports and integrated logistics network West Coast East Coast Installed Capacity Installed Capacity 335 MMT 203 MMT Dahej Mo 14 Kotkapur ga Kanec h MMT a Kilaraipur Kaitha Tuna Panipa l Dhamor t a 14 Pat Kannauj Samastipur & MMT li Kishanga Darbhanga rh Mundr

  10. Slide 10: APSEZ: Logistics to provide growth impetus & help reaching customer's gate

    APSEZ: Logistics to provide growth impetus & help reaching customer's gate Trains MMLPs Grain Silos Ware-housing Rail Tracks Assets 24 4 0.4 mn 510 FY16 Trains MMLP -- Sq. ft. KMs 75 6 0.87 0.8 mn 620 FY22 Trains MMLP MMT Sq. ft. KMs 3X 3X 3X 75X 3X 200+Trains 15 MMLP 2.5+ MMT 60 mn Sq. ft. 2000+ KM

  11. Slide 11: C Haifa Port Company (HPC) – Company Profile and Acquisition Case

    C Haifa Port Company (HPC)– Company Profile and Acquisition Case STRICTLY CONFIDENTIAL

  12. Slide 12: Haifa Port Company – Company Profile and Acquisition Case: Contents

    Haifa Port Company – Company Profile and Acquisition Case: Contents 1. Overview of Israel’s Ports sector 2. Overview of Haifa Port and the Haifa Port Company 3. Key Bid Specifications - Port and Real Estate Development 4. Acquisition Details - Pricing and Financing Structure 5. Business Growth – Sce

  13. Slide 13: 1. Overview of Israel's Ports sector

    1. Overview of Israel’s Ports sector

  14. Slide 14: Israel's Economic Outlook

    Israel’s Economic Outlook  Israel has a total population 9.4 Mn, that has median USD to NIS conversion rate age of 30.5 years 4.4 4.2  The country’s 2021 GDP was at USD 482 Bn and its 4.0 annual average GDP growth rate of last 10 years is 3.8 ~3.5% 3.6 3.4 3.2  Sovereign rating of A1 with positiv

  15. Slide 15: Haifa Port is the Country's Largest Port

    Haifa Port is the Country’s Largest Port  Israel has a total of 5 ports of which 3 are major commercial ports - Haifa, Ashdod and Eilat; all 5 ports are under ‘Israel Port Authority’  Haifa Port –located up North, is the largest port of Israel and handled 56% of country’s cargo volume in 2021. It

  16. Slide 16: Container Share is over half of the Country's Total Cargo Volumes

    Container Share is over half of the Country’s Total Cargo Volumes Cargo handled at all Ports in Israel (in MMT) Cargo Traffic in Israel (in MMT) CAGR 3% 56% 55% 56% 56% 56% 60 52% 60% 60 2 12 2 2 50% 50 15 15 2 16 5 50 40% 12 2 25 40 11 4 4 2 24 24 12 40 22 30% 3 4 11 10 19 3 30 8 9 19 20% 8 30 20 1

  17. Slide 17: 2. Overview of Haifa Port and the Haifa Port Company

    2. Overview of Haifa Port and the Haifa Port Company

  18. Slide 18: Haifa Port has Five Operators and a Good Mix of Different Cargo Types

    Haifa Port has Five Operators and a Good Mix of Different Cargo Types • Haifa port with its 10 terminals serves a vast hinterland, Volumes (in MMT) - Port Operators at Haifa Port particularly the two major cities of Israel i.e. Haifa (300 m away) & 58% Tel Aviv (90 kms away) and has good Rail & Road

  19. Slide 19: Haifa Port Layout

    Haifa Port Layout Eastern Container Terminal Carmel Container Terminal Kishon - West Terminal Kishon-East Terminal • Length: 960m • Length: 700m • Length: 640 m • Length: 650 m • Depth: up to 14.5m • Depth: up to 16.5 m • Depth: up to 11 m • Depth: up to 12 m • Area: 403 dunam (~100 acres) • Area: 2

  20. Slide 20: Haifa Port Company (HPC) – Operator of Israel's Largest Port

    Haifa Port Company (HPC) – Operator of Israel’s Largest Port  Founded in 2005, Haifa Port Company is a state-owned NIS Millions 2017 2018 2019 2020 2021 Volumes (in MMT) 16 17 16 17 17 player operating at Haifa Port (established in 1933) Revenue 695 781 746 748 845  HPC operates and maintains 5 te

  21. Slide 21: 3. Key Bid Specifications - Port and Real Estate Development

    3. Key Bid Specifications - Port and Real Estate Development

  22. Slide 22: Bid Specifications – Some Key Details

    Bid Specifications – Some Key Details Particulars Details Concession Period Till February 2054 (~32 years) Obligatory Services Cargo Handling and storage ; Services for Passenger ; Supply of Water, Fuel and Electricity to vessels; Dock Allocation Real Estate Development • Building construction and f

  23. Slide 23: Haifa Port Waterfront Development Opportunity is a Key Component of the Bid

    Haifa Port Waterfront Development Opportunity is a Key Component of the Bid Municipal seafront project in the port of Haifa  Objective: To create a Port City with a vibrant development that makes Haifa a global destination through development of the western port as the main urban seafront  Total A

  24. Slide 24: 4. Acquisition Details - Pricing and Financing Structure

    4. Acquisition Details - Pricing and Financing Structure

  25. Slide 25: Acquisition Price of HPC

    Acquisition Price of HPC Transaction Value: (minus) Cash with HPC (post transaction): EV of HPC: NIS 3.9 Bn^ NIS 2.08 Bn NIS 1.82 Bn NIS 0.93 Bn Cash and Cash equivalents (net) as of 31st December 2021 NIS 2.9 Bn: NIS 1.0 Bn: Paid towards Primary cash acquisition of infusion in NIS 1.0 Bn 100% share

  26. Slide 26: Probable Financing Structure of Deal

    Probable Financing Structure of Deal  We anticipate that the deal will be 75% debt financed from the local bank/market (Equity = NIS 975 Mn; Debt = NIS 2925 Mn) APSEZ Gadot  Debt will be raised at the SPV / Holding Company level, and 70% 30% serviced using dividends/funds received from HPC  Loan

  27. Slide 27: 5. Business Growth – Scenarios and Estimated Returns

    5. Business Growth – Scenarios and Estimated Returns

  28. Slide 28: Scenarios Summary

    Scenarios Summary Two scenarios - Base case and Worst case – created for HPC’s financial forecasts (FY 2023-32) and estimated returns for APSEZ.  Scenario 1: Base Case – Port Operations continue to grow, and Real Estate Portfolio is hived off in 2028  Port operations continue to thrive, and operat

  29. Slide 29: Scenario 1 (Base Case) - Port Business Segment (Cargo Volumes Forecasts)

    Scenario 1 (Base Case) - Port Business Segment (Cargo Volumes Forecasts) Key Assumptions: HPC Cargo Volumes  Israel’s cargo growth largely in line with the historic trend 35 47% 48% 60% 47% (3.5% for containers and 4% for bulk & general) 30 40% 40% 50% 39% 25 40% 12.6  Given the commissioning of a

  30. Slide 30: Scenario 1 (Base Case) - Port Business Segment (Financial Forecasts)

    Scenario 1 (Base Case) - Port Business Segment (Financial Forecasts) Port - Revenue & EBITDA (NIS Mn) 2,000 52% 60% 46% 50% 1,781 1,500 40% 29% 26% 1,240 919 30% 1,000 20% 845 570 796 10% 500 245 209 0% - -10% 2021 2022 2027 2032 Revenue EBITDA Margins  Average realization over the forecast period

  31. Slide 31: Scenario 1 (Base Case) - Real Estate Segment

    Scenario 1 (Base Case) - Real Estate Segment Haifa Seafront Development Area ('000 sqm) Real Estate - Revenue & EBITDA (NIS Mn) 160 141 136 500 469 48% 136 422 140 118 47% 120 400 47% 46% 100 300 45% 80 60 200 44% 40 26 43% 10 100 43% 20 42% 182 222 - - 41% 2021 2023 2027 2028 2027 2028 Cumulative d

  32. Slide 32: Scenario 1 (Base Case) - Consolidated Port and Real Estate Business Segments (HPC)

    Scenario 1 (Base Case) - Consolidated Port and Real Estate Business Segments (HPC) Cash Inflows to APSEZ from HPC Revenue & EBITDA HPC: 80,000 505% Port + Real Estate (NIS Mn) 500% 70,000 2,000 60% 52% 400% 60,000 45% 50% 1,500 300% 50,000 40% 200% 26% 919 40,000 1,000 29% 753 82% 30% 37% 48% 56% 67

  33. Slide 33: Scenario 2 (Worst Case Scenario) - 2021 Status Quo but factoring the Registered Employee Retirements

    Scenario 2 (Worst Case Scenario) - 2021 Status Quo but factoring the Registered Employee Retirements 2021 Worst Case Worst Case NIS in Millions 2021 Remarks Normalised (Initial 3 year) (Year 4-6) Revenues 845 845 845 845 (-) Opex (601) (601) (521) (499) 70% of Opex is Employee cost and the Opex cost

  34. Slide 34: 6. Conclusion - Investment Summary

    6. Conclusion - Investment Summary

  35. Slide 35: Conclusion: Investment case

    Conclusion: Investment case  At an Implied EV of NIS 1.82 Bn and an EV/EBITDA multiple of 7.5x, the deal is value accretive for APSEZ’s investors from day one  Annual average RoE for APSEZ is ~90% in INR terms for the initial 10 years in our base case scenario  With equity investments (INR 16 Bn)

  36. Slide 36: 7. Annexure

    7. Annexure

  37. Slide 37: Haifa Seafront RE Development details

    Haifa Seafront RE Development details S No Category Type of Development Area sqm Proposition Hotel - 4 Star 10900 • 150 rooms 4 Star seafront hotel 1 Hospitality Hotel – 3 Star 11700 • 200 rooms 3 Star seafront hotel F&B 8000 • Premium seafront retail area led by international brands across lifestyl

  38. Slide 38: Key Common Assumptions

    Key Common Assumptions  Interest rate as per prevailing market rate (5%). Interest moratorium of 3 years considered  Corporate tax rate in line with country’s tax rate (23%)  Dividends paid to the Holding Co. from year 1 from the profits generated  After commissioning of Eastern Terminal in 2028

  39. Slide 39: Financial Projections: Scenario 1 (Base Case)

    Financial Projections: Scenario 1 (Base Case) NIS in millions UoM 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 PORT BUSINESS HPC Volumes in MMT 16 16 17 19 21 23 24 26 27 29 31 % growth % -9% 0% 10% 10% 10% 11% 6% 6% 6% 6% 6% Revenues NIS Mn 796 807 892 988 1,096 1,240 1,331 1,431 1,538 1,

  40. Slide 40: Financial Projections: Scenario 1 (Base Case)

    Financial Projections: Scenario 1 (Base Case) NIS in millions UoM 2022 2023* 2024 2025 2026 2027 2028 2029 2030 2031 2032 COMBINED (PORT + RE) Revenue NIS Mn 796 819 941 1,091 1,443 1,662 1,800 1,431 1,538 1,655 1,781 % growth % -6% 3% 15% 16% 32% 15% 8% -21%(2) 8% 8% 8% (-) Opex NIS Mn (588) (568)

  41. Slide 41: Disclaimer

    Disclaimer Certain statements made in this presentation may not be based on historical information or facts and may be “forward-looking statements,” including those relating to general business plans and strategy of Adani Ports and Special Economic Zone Limited (“APSEZL”),the future outlook and grow

Adani Ports & Special Economic Zone — Merger or Acquisition (July 2022) on 6ix