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The Chennai Port Authority has approved an Initial Public Offering (IPO) for its wholly owned subsidiary, Kamarajar Port Ltd, marking the first instance of a state-owned port in India entering public markets. The board also approved issuing bonus shares from Kamarajar Port's reserves of about INR 3,000 crore to protect the authority's interest. Funds from the IPO will be used to repay an outstanding INR 843 crore SBI loan and address a pension deficit of INR 2,582 crore. Earlier approvals from the Ministry of Ports and Kamarajar Port's board have paved the way for the listing.
The Chennai Port Authority has granted in-principle approval for an Initial Public Offering (IPO) of its wholly owned subsidiary, Kamarajar Port Ltd, making it the first state-owned port in India to go public. This approval follows earlier clearances from the Ministry of Ports, Shipping and Waterways and the board of Kamarajar Port. Advertisement
During a recent board meeting, the authority decided that Kamarajar Port will issue bonus shares from its reserves and surplus, estimated at around INR 3,000 crore, before the IPO. The board said this measure is necessary to protect its 100 percent equity holding in the company.
Kamarajar Port currently has an authorised capital of INR 500 crore and a paid-up capital of INR 300 crore, all held by the Chennai Port Authority. There are 20 crore shares available for issuance in the future. The number of shares to be sold through the IPO will be determined based on the company's valuation and price band at the time of listing.
The funds raised through the IPO will primarily be used to repay an outstanding loan of INR 843 crore taken from the State Bank of India. This loan was used to acquire the government's 67 percent stake in Kamarajar Port in a 2020 government-to-government transaction for INR 2,383 crore. A significant portion of the proceeds will also go towards bridging a pension fund deficit currently standing at around INR 2,582 crore.
The IPO size will be limited to the amount required to clear the SBI loan and fund the pension shortfall. In the future, Kamarajar Port may pursue additional public offerings to raise capital for expansion, subject to approvals from its board and the Chennai Port Authority.
Kamarajar Port was originally developed to handle thermal coal and reduce environmental pressure on Chennai Port. Over the years, it has expanded its capacity and diversified its cargo handling operations. Incorporated under the Companies Act, it is India's only corporatised major port, equipped to handle multiple cargo types and future infrastructure developments. Its listing is expected to enhance transparency, allow public participation, and provide a model for other state-owned infrastructure units considering market-based financing.
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