Industry Funds Management (IFM), the Australian fund manager owned by over 30 superannuation funds, has captained a consortium of institutional investors to win the 99-year leases for Port Botany and Port Kembla, in New South Wales.
IFM, together with AustralianSuper, Cbus, HESTA, HOSTPLUS, and a subsidiary of the Abu Dhabi Investment Authority, is paying A$5.07 billion (€4.08 billion; $5.3 billion) for the port leases. The deal is being funded on a conservative debt-to-equity ratio of 35:65, with a consortium of international and Australian banks providing a debt package with a mix of maturities.
For IFM, which up until now only had a relatively small interest in the Port of Brisbane out of its circa A$6 billion Australian infrastructure portfolio, the leases are a way of “increasing our exposure to both the ports sector and the state of New South Wales,” IFM chief executive Brett Himbury told Infrastructure Investor.
The deal also has a broad set of characteristics that Himbury hopes will be taken up by governments around the world:
“This is a great ‘social privatisation’ model that we would like to see emulated. With over 80 percent ownership by Australian industry superannuation funds, the investment will benefit the superannuation savings of an estimated five million Australians – including more than 1.5 million in New South Wales.”
He continued: “New South Wales now has A$5 billion added to its budget and, importantly, Treasurer Mike Baird has committed to recycle that money to build new assets. So the residents of New South Wales can be confident the money will be spent on building new hospitals, roads, and the like.”
Port Botany and Port Kembla are described by IFM as “essential infrastructure assets which serve as the primary import and export gateways to New South Wales, Australia’s largest economy and home to approximately one third of the nation’s population”. Port Botany also doubles as New South Wales’ only container handling facility of scale. Port Kembla, located some 90 kilometres south of Sydney, primarily exports coal and other bulk products.
IFM has been fairly active on the acquisitions trail. Earlier in March, it boosted its stake in the manager of Darwin, Alice Springs and Tennant Creek airports from 55.6 percent to 77.4 percent. It also bumped up its holding in the owner of Melbourne and Launceston airports from 20.7 percent to 23.7 percent.
In late January, the fund manager bought a 35.5 percent stake in the UK’s Manchester Airports Group, as part of a deal that saw the latter buy London’s Stansted Airport for $2.4 billion. But Himbury is quick to point out that IFM “still has more capacity to invest in quality assets around the globe”.
Last year, IFM raised $2 billion from the North American market alone.