"Ports are increasingly attracting the interest of investors. The merger and acquisitions trend in port have hit India, too," Ernst and Young said in a study.
One of the main reasons why there would be an increase in M&A activities in this sector is that investors feel that port offers a steady source of income, it found.
Financial investors, especially with a long-term horizon, like port assets because these assets tend to generate steady cash flows and high margins.
"Mature ports such as Hong Kong, Singapore or Los Angeles provide a steady income stream while ports in the emerging markets of China, India and Eastern Europe have strong potential for growth," it pointed out.
The investors, who are expected to invest in ports, are banks, private equity funds and pension funds.
In 2007, PE firm Global Infrastructure Partners bought 25 per cent stake in Chennai Container Terminal, which is the leading container terminal on the country's east coast and second largest private container terminal in India overall by traffic volume.
In 2008, PSA acquired a 49 per cent stake in ABG Kandla Container Terminal from Mumbai-based ABG Infralogistics. The Kandla terminal handles 1.65 lakh twenty-foot equivalent units last year.
PSA had purchased a 49 per cent stake in ABG Kolkata Container Terminal for Rs 50 crore.
