Global investors bet $10b on Aussie port

A container ship is seen in the port in Melbourne. State regulators have approved lease of Melbourne Port to a consortium with Chinese investment.
A container ship is seen in the port in Melbourne. State regulators have approved lease of Melbourne Port to a consortium with Chinese investment.PHOTO: REUTERS

State regulators approve lease of Melbourne Port to consortium with Chinese investment

MELBOURNE • An Australian-led consortium with Chinese investment won a 50-year lease yesterday on the nation's biggest container and cargo port for A$9.7 billion (S$10 billion), the latest maritime asset to be privatised.

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

Australian media reported that GIP was acting partly on behalf of China's sovereign wealth fund CIC Capital, which was said to have effectively secured 20 per cent of the port.

The move 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.

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 biggest 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 become privatised.

Said QIC Global Infrastructure chief Ross Israel: "The Port of Melbourne is core infrastructure - it is a critical and strategic piece of the Victorian and Australian logistics supply chain.

"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."

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 containerised, automotive and general cargo.

The state government said: "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."

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," said state treasurer Tim Pallas.

"Leasing the port reinforces Victoria's position as the freight and logistics capital of Australia, and will make a great port even better."

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on September 20, 2016, with the headline 'Global investors bet $10b on Aussie port'. Print Edition | Subscribe