As DIPAM Appoints Advisors For CONCOR Disinvestment, Why This State Owned Logistics Player Will Attract Private Buyers

The Department of Investment and Public Asset Management (DIPAM) has appointed three advisors to conclude the 31% stake sell in the government-owned Container Corporation of India (CONCOR) logistic arm of Indian Railways. The company disclosed this information in a filing to BSE.

DIPAM is mandated with the management of Central Government investments in equity including disinvestment of equity in Central Public Sector Undertakings.

The Union Cabinet last month approved strategic disinvestment of 30.8 per cent shareholding of the Government of India (the Government of India holds 54.8 per cent equity currently ) in CONCOR along with transfer of management control to a strategic buyer.

DIPAM announced that L&L Partners will advise on legal issues related to the disinvestment, Deloitte Touche Tohmatsu India will serve as transaction advisors while RBSA Valuations Advisors LLP will perform the asset valuation.

CONCOR has a over 70 per cent share in the container train market with its large network of over 80 container terminals spread across the country. The company holds assets including 15,000 plus container wagons, a 26,000 containers, 14 gantry cranes and 102 reach stackers .

The company has entered in to joint ventures with shipping lines (like Maersk, CMA-CGM, Transworld, AllCargo); and logistics players like Transport Corporation of India and international port terminal operators like APM Terminals and DP World.

Though the container train operations sector had been privatised long back, private players continue to languish as CONCOR dominates the market. Ministry of Railways provides privileged access to railway land and tracks making it difficult for the private players to make significant headway.

The strategic disinvestment is expected to unlock greater value for the company and help in increasing the share of rail sector against road sector for container movement.

Adani Ports and SEZ Ltd, DP world are among the leading private companies that are likely to consider buying the government’s stake in CONCOR, even though it is cheaper to build the business from scratch.

CONCOR is sure to attract global majors with exposure in ports as well as container train operating licenses.