Ashurst, MinterEllison, and HSF part of mega port deal

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by Michael Mata

The Victorian government’s long-running efforts to enrich its coffers with the sale of a 50-year lease to operate the Port of Melbourne is coming to a close. The two remaining contenders lodged final bids on September 16 for one of the biggest privatisations in Australia this year.

The offers to buy the 50-year lease to operate the Port of Melbourne were submitted by 10 am Sydney time. The winner will be swiftly decided and Tim Pallas, the state treasurer, will announce the winning bid early this week (Tuesday at the latest). The two binding bids are likely to be worth $6.5 billion to $7 billion each.     

The Victorian government is planning to use the funds earned from the sale of the lease to bankroll its commitment to removing the 50 worst train level crossings in Melbourne. Ten percent of the total proceeds will also be spent on much needed infrastructure in rural and regional areas.

As with many recent large-scale attempts to acquire land and infrastructure in Australia, Chinese investors were prominent contenders. 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.

With the Chinese investors eliminated, Australia’s biggest infrastructure investors, QIC Limited and IFM Investors, along with their respective bid partners, are scheduled to go head-to-head in their attempt to secure Australia’s busiest port for containerised and general cargo.  

Sources predict the winning bid will likely hinge on the proposed business plan for the port and the willingness of the bidding contender to comply with all the conditions set down by the Victorian government.

Opinions are divided on the Port of Melbourne’s final valuation, with some sources claiming that the clear regulatory regime and the potential revenue growth from the port likely to elevate its valuation to $8 billion or higher.

Credit Suisse, Gresham, and Herbert Smith Freehills are advising the QIC-led consortium, while Macquarie Capital and Ashurst LLP are working for the IFM group.

Flagstaff Partners and Morgan Stanley, along with MinterEllison, are conducting the auction for the Victorian government.