Future Fund, QIC and China’s CIC Capital buy Port of Melbourne

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The Future Fund, Queensland Investment Corporation and one of China’s biggest sovereign wealth funds have snapped up the Port of Melbourne for a whopping $9.7 billion.

The Future Fund and QIC teamed up with international investment managers Global Infrastructure Partners and Canadian pension fund the Ontario Municipal Employees Retirement System (also known as OMERS) as part of its consortium.

A fund managed by Global Infrastructure Partners will hold a 40 per cent stake in the port.

The investors in the fund include the $200 billion sovereign wealth fund CIC Capital, which will hold the equivalent of 20 per cent stake in the port by virtue of it owning half of the shares in the fund. Korean pension fund NTS is also thought to be an investor in the GIP fund that has participated in the consortium.

The new owners of a 50-year lease over Australia’s busiest port plan to put in a place a business plan to bolster productivity.

As part of its successful bid, the Lonsdale Consortium – which was advised by Gresham Partners and Credit Suisse – will invest substantial capital to expand the existing capacity of the port to better service the state’s freight needs.

The Future Fund-led “Lonsdale consortium” pipped another group that included Industry Funds Management and Macquarie Infrastructure.

Future Fund chair Peter Costello welcomed the deal, saying the lease would be an important contributor to the fund’s long-term investment objectives.

“The Port of Melbourne is a high quality asset and an important link between Australia and its trading partners,” Mr Costello said.
“We’re delighted to invest in it and to add it to our portfolio of Australian and global infrastructure assets,” Mr Costello said.
QIC global infrastructure head Ross Israel said it would leverage its experience in owning ports to deliver improvements to the port and for its users.

“We look forward to working with the Victorian Government, port stakeholders and neighbouring communities to maintain, invest and grow Port of Melbourne into the future,” Mr Israel said.
The Lonsdale Consortium members own a slew of infrastructure interests throughout Australia including Melbourne Airport, Iona Gas Storage Facility and EastLink toll road.

QIC also has an interest in the Port of Brisbane, while GIP was involved in the privatisation of NSW Ports (the Kembla Port and Botany Port),

The Victorian government plans to plough $970 million of the proceeds of the sale into infrastructure projects in regional and rural Victoria.

Large portions are also expected to be committed to major infrastructure projects in the state including potentially the Metro Rail project.

Premier Daniel Andrews welcomed the deal, describing it as a “$9.7 billion vote of confidence in the Victorian economy”.

By Sarah Danckert

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