Australia’s busiest container port leased for $7.3 billion

In a sale that is nearly US$3 billion more than the asking price, the Port of Melbourne has been sold to Lonsdale Consortium in a 50-year lease for a near $10 billion, according to ABC News.

The Lonsdale Consortium, comprising of the Future Fund, QIC, GIP and OMERS signed a lease of the port’s commercial operations for a term of 50 years. The transaction is expected to close on 31 October.

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“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 an interview with Reuters.

While the state government will retain responsibility for the Harbour Master, Station Pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response, Lonsdale will maintain access to public walkways and bike paths for community use.

Peter Costello, chair of the Future Fund’s board of guardians, said: “The Port of Melbourne is a high-quality asset and an important link between Australia and its trading partners”.

More than $970 million of the purchase price will be spent on regional and rural infrastructure projects.

The Australian Logistics Council (ALC) said the lease must be accompanied by significant investment in road and rail infrastructure, linking the port to the wider transport network to maximise its economic contribution to Victoria and the nation. While Chinese participation in the Port of Melbourne race avoided censure from the capital, the lack of a domestic partner was widely viewed as a key reason for the elimination of Chinese investors early in the race.

The Lonsdale Consortium members own a slew of infrastructure interests throughout Australia including Melbourne Airport, Iona Gas Storage Facility and EastLink toll road.

Over the past decade, more than AUD2bn has been invested to upgrade its infrastructure. Western Australia state meanwhile wants to sell ports, while the Federal government is selling the Australian Security and Investments Commission’s registry arm.

“ALC looks forward to the government prioritising logistics infrastructure investment from the proceeds of the sale, and from the 15 per cent dividend to be provided to the state under the federal government’s asset recycling scheme”.