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Three investors set to bid for Port of Melbourne

Three investors set to bid for Port of Melbourne
The Port of Melbourne is in the process of privatisation

Three infrastructure funds plan to bid for the Port of Melbourne, according to an anonymous source who Reuters said has knowledge of the bidding process.

The sale is estimated to be set to raise A$5bn (US$4.3bn) for the State of Victoria.

The likely bidders are: pension fund IFM Investors; QIC Ltd and a consortium comprising Hastings Funds Management and Wren House Infrastructure Management.

The official expression of interest process is expected to start in early 2015 and the proposed lease is for 40 years.

The Port of Melbourne handles around 37% of Australia’s container trade or 2.5m teu a year.

Several Australian ports have been privatised in the last four years to raise money for regional governments including the Port of Brisbane, Port Botany and Port Kembla.

For example in April, Hastings Funds Management and China Merchants jointly bought the Port of Newcastle, Australia’s biggest coal terminal, for A$1.75bn (US$1.5bn).

The State of Victoria will elect a new government on Saturday but, as both major parties support the privatisation, it will happen regardless of who wins although the structure of privatisation may differ.

The ruling Liberal/National coalition want to tie the sale of the Port of Melbourne to the expansion of the Port of Hastings, giving the successful Melbourne bidder the option to participate in the expansion of Hastings, a suburb east of Melbourne.

The Labor Party favours the development of a second container port at Bay West, 50km west of Melbourne and a 99-year lease on the Port of Melbourne. It has not yet been determined over whether the winning Melbourne bidder would be given rights over Bay West.