Consortium to acquire Port of Melbourne for US$7.3bn

Australia’s Victoria state government has announced that a consortium comprising domestic and global funds agreed to acquire a 50-year lease of the Port of Melbourne for A$9.7bn (US$7.3bn).

The winner is the Lonsdale Consortium, which includes infrastructure investment manager Global Infrastructure Partners (GIP), which is backed by China Investment Corp; investment firm QIC; Australia’s sovereign wealth fund Future Fund and investment firm OMERS Private Markets.

The transaction is expected to close on October 31, with the consortium pledging to invest “substantial capital” to expand the existing capacity of the port.

According to a government statement, 10% of the lease proceeds will be invested in regional and rural infrastructure projects for a total of over A$970m (US$735m).

The deal, in which Gresham Partners and Credit Suisse acted as financial advisers to the consortium, is part of a US$76bn privatisation program being carried out by the Australian government.

Members of the Lonsdale Consortium are already involved in port assets including the Port of Brisbane and UK port operator Associated British Ports.

QIC’s global infrastructure head Ross Israel said: “The Port of Melbourne is core infrastructure – it is a critical and strategic piece of the Victorian and Australian logistics supply chain.

“Our consortium has developed a long-term vision and business plan […] [and] QIC is focused on delivering long-term stewardship and improvements to the port and for its users.”

The Victoria state government is expected to retain responsibility for the harbour master, station pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response.

According to a government statement, no commercial vessels will be affected by the lease.

Australia’s Treasurer Tim Pallas said in a statement: “Leasing the port reinforces Victoria’s position as the freight and logistics capital of Australia and will make a great port even better.”