Tue, Sep 20, 2016 - Page 10 News List

Port of Melbourne leased for US$7.3bn

PRIVATIZATION:The sale of state-owned infrastructure to foreign investors must be formally reviewed following concerns over the sale of a port to China’s Landbridge


An Australian-led consortium with Chinese investment yesterday won a 50-year-lease on the nation’s biggest container and cargo port for A$9.7 billion (US$7.3 billion), the latest maritime asset to be privatized.

The Port of Melbourne, Australia, which deals with more than 3,000 ships annually, was bought by a consortium including Australia’s second-largest wholesale funds manager the Queensland Investment Corp (QIC) and multinational firm Global Infrastructure Partners (GIP).

The Australian newspaper reported that GIP was acting partly on behalf of China’s sovereign wealth fund CIC Capital, which it said had effectively secured 20 percent of the port.

A source close to the consortium confirmed that CIC Capital was represented by GIP, but would not reveal the size of its investment.

The decision comes just months after the government introduced tougher rules for the sale of major Australian state-owned infrastructure to private foreign investors following concerns over a 99-year lease for the Port of Darwin to China’s Landbridge Group.

The new rules, introduced in March this year, state that sales of crucial infrastructure to private foreign investors must be subject to a formal review by Australia’s foreign investment advisory body.

China was also part of an Australian-led consortium that secured an 98-year lease in 2014 for the world’s largest coal export port in Newcastle.

That deal followed the long-term lease of Sydney’s Port Botany and Port Kembla further south, as a growing number of major Australian ports are privatized.

“The Port of Melbourne is core infrastructure — it is a critical and strategic piece of the Victorian and Australian logistics supply chain,” QIC Global Infrastructure chief Ross Israel said.

“Our consortium has developed a long-term vision and business plan. Leveraging our global port and regulated asset experience, QIC is focused on delivering long-term stewardship and improvements to the port and for its users,” he said.

The price tag was well above expectations, with the Victorian state government initially seeking A$6 billion for one of Australasia’s largest maritime hubs for containerized, automotive and general cargo.

“The lease, worth in excess of [A]$9.7 billion, reflects strong bidder interest and the port’s value, as the biggest container and cargo port in the country,” the state government said.

Another consortium including Australian fund manager IFM Investors and Dutch pension fund APG Asset Management was also in the running.

A large chunk of the proceeds of the sale, which has been approved by regulators, will be spent on regional and rural infrastructure projects.

“Regional Victoria will be big winners from the lease, with significant funding to support projects they need, like better roads, and irrigation and energy projects,” Victorian state Treasurer Tim Pallas said.

“Leasing the port reinforces Victoria’s position as the freight and logistics capital of Australia and will make a great port even better,” he added.

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