Queensland Investment Corporation consortium wins Port of Melbourne for almost AUD 10bn

19 September 2016 - 12:00 am UTC

The 50-year lease of the Port of Melbourne has been won by a consortium including Queensland Investment Corporation, the Future Fund and Global Infrastructure Partners for AUD 9.7bn (USD 7.3bn).

It is understood the price is more than 25 times Port of Melbourne’s expected earnings before interest and tax for its 2015-16 financial year.

The winning Londsdale Consortium is comprised of the Future Fund, QIC, Global Infrastructure Partners and Ontario Municipal Employees Retirement System Private Markets.

As well as QIC’s global infrastructure fund, Queensland Investment Corporation is investing on behalf of several other funds, including the Future Fund, US based Golden Reef Infrastructure Trust and California Public Employees Retirement System. These four are taking a combined 40% share. GIP is taking 40% and OMERS 20%.

GIP is investing on behalf of China Investment Corporation, which has taken a little under 20%, Korea’s National Pension Service, which will have a 20% share and a number of other GIP-managed investors.

CIC is a state owned fund which manages investments of China’s foreign exchange reserves.

OMERS Private Markets invests on behalf of OMERS. It is made up of Borealis Infrastructure and OMERS Private Equity.

The deal will reach financial close on 31 October.

The Lonsdale Consortium beat a rival bid for Australia’s biggest container port led by Australian fund IFM Investors. 

In case of a successful bid, IFM were to hold 50-55% of the port, with fellow consortium members APG holding 25-30% and Macquarie Ifrastructure Real Assets taking 20%.

The money raised by the lease will be used to pay for other infrastructure projects around the state, including removing dangerous train level crossings. Ten per cent of the proceeds, AUD 970m, will be invested in rural infrastructure, including transport, irrigation, and energy projects.

“We promised to lease the port, get rid of Victoria’s most deadly and congested level crossings and create thousands of jobs, and that’s exactly what we are doing,” Victoria’s premier, Daniel Andrews said in a statement.

The Lonsdale Consortium said it would invest “substantial capital to expand the existing capacity of the port to service the freight needs of the state for 50 years” and will foster close ties with industry and the local community.

Peter Costello, chairman of the Future Fund, said the port will be “an important contributor to our long-term investment objectives as Australia’s sovereign wealth fund”.

QIC’s global infrastructure chief, Ross Israel, said its consortium had developed “a long term vision and business plan” focused on delivering long term stewardship and improvements to the port and for its users.

“We believe this investment brings significant diversification benefits for our clients as a landlord port with a well-defined regulatory regime in a globally scarce infrastructure subsector.”

Credit Suisse, Gresham and Herbert Smith Freehills advised the QIC-led consortium. Macquarie Capital and Ashurst worked for IFM’s group.

Flagstaff Partners and Morgan Stanley and lawyers Minter Ellison are advising the Victorian Government.

Queensland Investment Corporation