GIP, Morgan Stanley vie for Port of Brisbane

Two consortia led by Global Infrastructure Partners and Morgan Stanley have submitted final bids for Australia’s Port of Brisbane, both thought to be below the government’s valuation of $2.4bn. A winner should be officially announced next week but the deal’s ‘old market structure’ may push some banks away.

Australia’s Queensland state government has recently received two final bids for the sale of Port of Brisbane, a source familiar with the deal confirmed to Infrastructure Investor.

The bidders are a team comprising Global Infrastructure Partners (GIP) and state-backed Queensland Investment Corporation, advised by Macquarie Capital; and a consortium including Morgan Stanley Infrastructure and Australian pension fund UniSuper. A winner could be announced as early as next week, reports suggest.

While the value of the two final offers is not known, local newspaper The Australian suggests that the GIP-led consortium submitted a bid around the A$2 billion (€1.4 billion; $1.9 billion) mark with the Morgan Stanley team’s bid “believed to be well below that of the Macquarie syndicate”. Both bids appear to be significantly below the A$2.5 billion the government hoped to get for the port, the newspaper said.

A source that initially looked at the transaction on behalf of one of the consortia told Infrastructure Investor that its structure might discourage some lenders from the deal. “There’s no doubt the asset is very strong,” the source said, “but the deal is being leveraged too high and the pricing is being set too low. It’s being done with an old market structure, pre credit crisis”.

Reuters is reporting that consortia are looking to raise some A$1.25 billion in debt to back the purchase with margins hovering around the 200 basis points mark. The news agency is saying that BBVA, BNP Paribas, Credit Agricole Indosuez, National Australia Bank, Natixis, SMBC and WestLB are supporting the GIP consortium.

Bank of Tokyo-Mitsubishi, Commonwealth Bank of Australia, ING, HSBC, Societe Generale and Westpac Banking Corporation are said to be supporting the Morgan Stanley-led team. But the source told Infrastructure Investor that some of the banks reported to be involved might have already walked away from the deal.

Queensland’s Port of Brisbane posted a net profit of A$232 million in the year ending June 2010. Its sale is part of a A$15 billion privatisation programme being carried out by the Queensland government.