A consortium of investment funds agreed to pay AU$9.7 billion ($7.3 billion) for the state-owned Port of Melbourne on Monday, taking the country’s largest port private and exceeding Australian authorities’ expectations for the sale price by almost AU$4 billion.
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“Equity markets are starting to realize that they’re going to live in an environment where returns are going to be lower for longer, and they’re looking for secure investments”, Victoria Treasurer Tim Pallas said in an interview with Reuters.
Ten per cent of the lease’s value, or around $970 million Australian, will be invested in regional and rural infrastructure projects, Andrews said.
CIC is part of an investment consortium that has acquired the Port of Melbourne.
“Today’s confirmation that the Port has been leased for 50 years to a consortium comprising of the Future Fund, QIC, GIP and OMERS provides certainty to the logistics industry and unlocks significant funds for reinvestment”.
The lease of the Port of Melbourne was announced this week and promises $9.7 billion in extra funds for the Victorian government.
“The VTA welcomes the Victorian Government’s lease of the Port of Melbourne”, said Peter Anderson, VTA Chief Executive.
According to the daily The Australian, the GIP group acts partly in the name of the Chinese Sovereign Fund CIC, which will control 20 percent of the port’s management.
This is a smart way to increase exports, cut costs and create more jobs, and it’s firmly backed by the Victorian Farmers’ Federation.
“The same challenges are faced in the Blue Infrastructure area with the increasing population attracted to live by the water, especially Port Phillip and Western Port Bays”, he said.
Legislation to lease the port passed the State Parliament in March, after months of political wrangling.
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. Morgan Stanley and Flagstaff Partners were the State’s Financial Advisers for the Port of Melbourne lease transaction.
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Mr Andrews said he would work to finalise the extra 15 per cent Victoria will now be due under the federal government’s asset recycling scheme.
