Melbourne-headquartered fund manager Hastings Funds Management and Chinese state-owned enterprise (SOE) China Merchants have been selected as the successful bid team for the 98-year lease of Port of Newcastle in New South Wales (NSW). They reportedly beat off competition from five other bid teams.
Hastings is investing in the asset through the A$1.2 billion The Infrastructure Fund, which was launched in 1998 and has been managed by Hastings since 2000. The Private Capital Group acts as trustee of the fund.
Although the size of the winning bid was not mentioned in a statement from Hastings, a number of sources have cited a figure of A$1.75 billion (€1.2 billion; $1.6 billion). This represents a multiple of 27 times earnings and is further evidence of the strong appetite for privatised Australian infrastructure assets. The asset had been tipped to achieve a valuation of around A$1.0 billion.
Last week, toll road operator Transurban led a consortium which won the hotly contested auction for Queensland Motorways with a bid of A$7.057 billion – well ahead of expectations which ranged from A$5 billion to $A6.5 billion and also equating to around 27 times earnings.
Newcastle also follows the successful privatisation of Ports Botany and Kembla, for which a 99-year lease was acquired by a consortium led by fund manager Industry Funds Management (now IFM Investors) in a A$5.07 billion deal in April 2013 (equivalent to 25 times earnings).
Port of Newcastle is the economic and trade centre for the resource-rich Hunter Valley and for much of the north and north-west of NSW. It is one of the oldest ports in Australia with one of the largest throughputs. More than 90 percent of throughput tonnage is coal exports.
Founded in 1872, Hong Kong-headquartered China Merchants is one of the ten largest SOEs in China and focuses on transportation, finance and property. In 2010 it acquired Loscam, the Australian pallet logistics provider, which is now the largest pallet logistics provider in China.
“When looking for a suitable partner to manage and grow the Port of Newcastle we approached China Merchants because they possess unmatched expertise, having been involved in developing and managing ports and industrial parks for many years,” said Andrew Day, chief executive officer of Hastings, in a statement.
In a recent interview for the May 2014 issue of Infrastructure Investor, Day pointed to the firm’s increasing engagement with Asian markets. Last month, it announced a strategic alliance with Indian conglomerate Aditya Birla Group with the aim of providing a range of infrastructure investment initiatives.