Australian port sold for
$7.3 billion to group including Chinese fund
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[September 19, 2016]
By Cecile Lefort and Byron Kaye
SYDNEY (Reuters) - Chinese and Australian
sovereign wealth funds, along with other investors, on Monday said they
will take Australia's busiest port private for a higher-than-expected
A$9.7 billion ($7.3 billion), a sign that tough equity markets are
fuelling appetite for infrastructure.
The pricetag for Port of Melbourne fell short of the country's largest
privatization deal on record, the A$10.8 billion sale of electricity
grid company Transgrid to a global consortium in November 2015, but
still ranks among its biggest.
It also smashes the target set by the government of Victoria state which
previously said it hoped for A$5.8 billion for the container and
multi-cargo port. In 2013, the two ports of larger city Sydney fetched
"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 a
Australian leaders will also hope the deal shows they still welcome
Chinese infrastructure buyouts. The 2015 sale of smaller Port of Darwin
to Chinese interests set off a political backlash which culminated in
the federal government blocking a state-owned Chinese bidder from buying
the Ausgrid energy network last month, over national security concerns.
Australia began a free trade agreement with China in December but has
been trying to ease diplomatic strains with the mainland since the
Ausgrid rejection. China's commerce ministry warned at the time that the
move "seriously impacts the willingness of Chinese companies to invest
On Monday, Pallas said government-owned China Investment Corp will own a
fifth of Port of Melbourne, while Australia's sovereign wealth fund, The
Future Fund, will also get a fifth, as will Canada's Ontario Municipal
Employees Retirement System.
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A container ship is seen in the port in Melbourne June 2, 2010.
REUTERS/Mick Tsikas/File Photo
The government investment vehicle of Queensland state, New York-based Global
Infrastructure Partners, California Public Employees' Retirement System and
South Korean pension fund NTS will also get stakes following the sale, which is
packaged as a 50-year lease.
All foreign buyers have regulatory clearance, Pallas added.
The sell-off is part of Australia's more than A$100 billion privatization
program, where state and federal governments are trying to cut debt and bankroll
capital works by selling "mature" infrastructure assets.
New South Wales state, which arranged the troubled Ausgrid sale, is again trying
to offload that asset, and plans to dispose of another grid afterwards. Western
Australia state meanwhile wants to sell ports, while the Federal government is
selling the Australian Security and Investments Commission's registry arm.
($1 = 1.3278 Australian dollars)
(Reporting by Byron Kaye and Cecile Lefort; Editing by Stephen Coates)
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