IFM, QIC cleared for Port of Melbourne sale

The Australian competition watchdog believes the two proposals will not result in a substantial lessening of competition.

The Australian Competition and Consumer Commission (ACCC) has green lighted two consortia led by IFM Investors and QIC to bid for the lease of for Port of Melbourne, Australia’s busiest container port. 

The competition watchdog reviewed the two proposals with a focus on cross-ownership interests in port-related businesses, which all of the consortia members have. However, it explained that no single consortium member will control Port of Melbourne, or has a controlling stake in other ports or vertically related businesses. 

“The ACCC identified several constraints on the consortium members’ ability to discriminate in favour of these downstream port service provides or to share commercially sensitive information regarding rivals of these providers,”  ACCC chairman Rod Sims said in a statement, adding that neither acquisition would result in a substantial lessening of competition. 

Port of Melbourne will be overseen by the Victorian Essential Services Commission and will cap many fees and prices for port users at CPI for the first 15 years of the 50-year lease.

The watchdog's decision paves the way for the two consortia to continue their pursuit of the asset lease, which the government hopes will fetch about A$5.3 billion ($4.1 billion; €3.6 billion). The sale had been delayed due to concerns over whether the port's monopoly position could lead to higher fees for users. 

IFM Investors is bidding with Macquarie Infrastructure and Real Assets (MIRA) and Dutch pension fund manager AGP Asset Management. IFM has a 35 percent interest in NSW Ports and a 26.7 percent interest in Port of Brisbane. APG has a 4.4 percent indirect interest in DP World Australia, while a MIRA-related entity has an indirect interest of less than 12 percent in ANZ Terminals. 

On the other side, the QIC consortium, led by investment arm QIC Private Capital, comprises Global Infrastructure Partners’ GIM Advisory Services and Ontario Municipal Employees’ Retirement System’s Borealis Infrastructure. 

In terms of shareholdings in port-related businesses, QIC manages a 26.7 percent stake in Port of Brisbane and a 24.4 percent indirect interest in DP World Australia, while GIP manages a 15 percent stake in NSW Ports. GIP will also hold 43 percent of Pacific National upon completion of the Asciano transactions. 

“However, the ACCC did note that the proposed regulatory regime at the Port of Melbourne provides for stronger pricing oversight than applies at most other ports following privatisation,” Sims added.