Shares in one of India's few privately owned deepwater ports will start trading on Tuesday after an initial public offering valuing the equity of Mundra Port & Special Economic Zone at about $4.5 billion.
The appetite of investors for infrastructure assets in India was underlined by the high demand for the shares, which were more than 100 times subscribed. The company is majority-owned by the Adani Group, a family-controlled conglomerate.
The shares were priced on Monday at $11.20 per share, the top end of their initial price range. Mundra plans to raise about $450 million from the IPO. The stock closed at Rs 961.70 on the Bombay Stock Exchange.
Michael Queen, head of a new infrastructure fund at 3i, which was an early-stage investor in the Indian company and still owns 2 per cent, said: "Mundra is the only port in India that can handle the very largest Cape-sized vessels."
Mundra's success has been built on its position as an entirely private port in a country where most ports are either entirely operated by the inefficient public sector or owned by the public sector with terminals leased out to private operators.
Industry figures familiar with its operation on the west coast, north of Mumbai, say Mundra is far more responsive to customers' needs than those with state involvement.
It also has deep water able to handle most of the largest modern ships. Most other Indian ports become heavily silted during the annual monsoon and few have done the dredging work necessary to deepen access channels.
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"There is a critical infrastructure deficit in India, for roads, airports and energy," said Mr Queen. He pointed out that India was growing at 8 per cent a year and only spending 3.5 per cent of GDP on infrastructure, compared with China's 18 per cent.
The Mundra port developers have built India's longest privately owned railway line to link the port to the national rail network. The line is one of the few in India able to handle containers stacked two-high on trains - an efficient way of organising trains that is popular in North America.
Mundra has captured much of the container traffic heading to Delhi and other parts of northern India from Jawaharlal Nehru Port, near Mumbai, the country's most popular but often congested container gateway. Mundra also has significant business handling bulk products such as oil, iron ore and coal, whose consumption is booming as India's economy develops.
Mundra's IPO is the latest of a wave of such deals by ports groups in the last month. Shares in DP World, the world number four container terminal operator, are due to start trading in Dubai on November 26, while Hamburg's HHLA, main terminal operator in the Port of Hamburg, and Russia's Novorossiysk Commercial Sea Port have also both recently launched successful listings.
