CMA CGM's stake sale of Mundra port to China Merchants under scrutiny
WITH the widespread anti-China sentiment throughout India the government is examining a proposal to transfer part-ownership of a container terminal at India's busiest port Mundra, in Gujarat, to a Chinese company
WITH the widespread anti-China sentiment throughout India the government is examining a proposal to transfer part-ownership of a container terminal at India's busiest port Mundra, in Gujarat, to a Chinese company.
The facility is half owned by the Adani Group and its French joint venture partner CMA CGM. Mundra port is the jewel in the crown of Adani Ports and Special Economic Zone (APSEZ), the publicly listed holding company for all the India ports belonging to the Adani group.
Sited on the northern extremity of India's western coastline, Mundra handled a throughput of over 5 million TEU for the calendar year 2019, thereby pipping Jawaharlal Nehru Port for the top position among container terminals in the country. It also barged into the list of Top 30 container terminals in the world, for the first time.
As part of its worldwide re-organisation and consolidation blueprint, the French shipping giant has proposed to sell half of its equity holding to the Chinese state-owned China Merchant Port Holdings (CMPH) for a sum close to US$1 billion, and has officially sought the Indian government's clearance for the sale.
According to the application submitted by CMA Terminals of France in late May, the company that is engaged in 'developing, operating, maintaining terminal CT-4 at Mundra Port', wants to turn over half of its 50 per cent equity stake to a joint venture between the French company and the China Merchants group.
The proposal is presently being scrutinised by the Ministry of External Affairs (MEA) and the Ministry of Home Affairs (MHA), and has also been sent to the Ministry of Shipping and the country's central bank, Reserve Bank of India, reports Colchester's Seatrade Maritime News.
Government officials who received the application have revealed that the deal has 'not been cleared as of now'. The country's internal security agencies have already put a few other Chinese acquisition plans on hold over the past few months.
If the deal goes through, CMH will own 24.9 per cent of the equity in Adani-CMA Mundra Terminal.
Sandeep Mehta, the CEO of the countrywide port holdings of APSEZ, confirmed that the CMA CGM proposal had been sent to the government for clearance, but could not cast any further light on the situation.
'We are not really involved in the negotiations between our French partner and the Chinese entity; our shareholding will remain the same, regardless of the result of the CMA CGM disinvestment plan,' he said.
CMPH set up a joint venture in 2013 with CMA CGM to share ownership between 49 per cent and 51 per cent, over a global portfolio of 15 terminals. Last December, the two reached a $955 million deal for their Terminal Link venture to take on an additional ten port assets.