Haifa port acquisition by Adani a "strategic purchase" where "price didn't matter": Israeli media

AgenciesUpdated: Monday, July 18, 2022, 05:09 PM IST
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The Adani Group's acquisition of the Haifa port last week for USD 1.18 billion is being seen as a "strategic purchase" where "price was less important" given the difference in quote of the Indian conglomerate and its closest competitor in the bidding process, according to a media report on Monday.

Adani Ports and Special Economic Zone Limited (APSEZ) in Israel, the company, jointly with Israel's Gadot Group, won a tender to privatise Haifa port, the second largest port in Israel, last Thursday.

The Indian partner in the consortium holds 70 per cent of the stake while its local partner will have 30 per cent stake.

Adani Ports offered a rather staggering 4.1 billion shekels (USD 1.18 billion) for the port, 55 per cent more than the second highest bid, daily Ha'aretz reported.

"This is a much higher price than the government (of Israel) had first anticipated and has a price-to-earnings ratio of 18 (roughly calculated, based on the average of the past three years). It is as if Adani is saying: Step aside, this is a strategic purchase, and for us the price is less important", the report said.

In fact, when local groups competing to buy the port heard the price that Adani Ports had offered, they all backed out, it added.

"With such a gap, you understand that this is a completely different ball game. There's no point facing off against a player who sees the asset as a strategic investment," a person close to one of the rival bidders was quoted by the daily as saying.

The bid came through around the same time when the leaders of I2U2, comprising India, Israel, US and UAE, were holding a virtual conference with Prime Minister Narendra Modi and UAE President Mohammed Bin Zayed joining online Israeli Prime Minister Yair Lapid and Visiting US President Joe Biden from Jerusalem.

The new quad is being seen by some as a move to counter the growing influence of China.

"The infrastructure empire belonging to Gautam Adani, a personal friend of Modi and the richest person in Asia, was declared the winner of the move to privatise the state-owned Haifa Port, together with the Israeli company Gadot Chemical Terminals. This followed immense pressure by the United States on the Chinese not to submit a bid and after the Emiratis withdrew at the last minute," the daily said.

Adani's company operates 13 sea terminals in India and controls 24 per cent of India's maritime commerce.

He has no holdings in the West - so his entry into Israel is a signal for increased maritime traffic between Asia and Europe, and the major Asian players' need for a hub in the Mediterranean, the report pointed out.

"Delighted to win the tender for privatisation of the Port of Haifa in Israel with our partner Gadot [which has a 30 per cent stake in the port]. Immense strategic and historical significance for both nations! Proud to be in Haifa, where Indians led, in 1918, one of the greatest cavalry charges in military history!" Adani tweeted on Thursday.

"By noting the Indian cavalry charge in World War I when Indian troops defeated the Ottomans, the fourth-richest person in the world - Adani is worth nearly USD 113 billion - wrapped the deal in a nationalist-historic aura whose meaning is clear to everyone: When it comes to purchasing a controlling interest in a strategic asset like a port, it's not just a private deal but also a political maneuver. Behind the winner of the bid stands a country, for better or worse", the daily noted.

Israel expects that Adani's entrance on the local scene will now lead to more Indian investment, especially in the fields of renewable energy and defence.

The Adani group is already collaborating with leading Israeli defence companies on putting up a drone-manufacturing facility in India.

Powered by the vision of a new Middle East, Ha'aretz reported that another expectation that has arisen involves the construction of a rail link from Haifa Port to Jordan.

"This would be a diplomatic and logistical game-changer, one that has been discussed a great deal in the past. Now that an Indian company holds a controlling interest in Haifa Port and the Chinese (through the Shanghai International Port Group) hold a controlling interest in the nearby Haifa Bayport container terminal - it might finally become a reality", the daily said.

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