RREEF second bidder against Carlyle for Virginia port

Deutsche Bank unit RREEF will vie with the Carlyle Group for a chance to run the Port of Virginia. RREEF is offering $3.3bn to operate the port while Carlyle proposes to bid up to $2bn.

RREEF is bidding against The Carlyle Group to become private operator of the Port of Virginia, the Virginia Department of Transportation (VDOT) revealed in a meeting in Richmond Wednesday.

Infrastructure Investor a week ago had learned Washington, D.C.-based Carlyle had put forward a bid to take control of the port, along with a second, then unidentified private concern.

Current port manager, state-run Virginia International Terminals (VIT), is also a bidder. Old Dominion opened a competitive bidding process in April after APM Terminals (APMT) made an unsolicited offer to run the Port of Virginia.

In addition to naming RREEF, a unit of Deutsche Bank Group, as a potential operator with Carlyle and Netherlands-based APM, the meeting detailed each offer.

Carlyle, which like RREEF responded to a request for proposals (RFP), is offering up to $2 billion, while RREEF is proposing $3.3 billion.

APMT is willing to put up $4 billion for a 48-year lease, and is also willing to hand over ownership of its Portsmouth Marine Terminal to Virginia. Portsmouth, along with Norfolk International Terminal, the Newport News Marine Terminal and the Virginia Inland Port, comprise the Port of Virginia.

APMT, Carlyle and REEF are each expected to submit a “detailed” offer by Friday, October 5. VDOT and the Virginia Port Authority (VPA) will name a “preferred proposer” by Monday, October 15, with financial close expected by year-end.

VDOT secretary Sean Connaughton said the he hoped the swift procurement process would ease public concern.

“The process has created uncertainty,” Connaughton told Infrastructure Investor. “We are being urged to come to a determination one way or the other on the unsolicited proposal”.

The Carlyle bid marked the second time the private equity firm has put forward a proposal to run the port.

In 2009 Carlyle, along with marine terminal operator Carrix, bid to operate the Port of Virginia after a March unsolicited proposal from CenterPoint spurred a competitive process.

CenterPoint had offered a lump $500 million sum to operate the port under a 60-year lease. Carlyle priced its own 60-year concession between $500 million and $700 million.

Seattle-based Carrix, a Goldman Sachs Infrastructure Partners (GSIP) portfolio company, did not want a concession agreement, and campaigned instead for a 30-year contract to advise VIP.

But the VPA determined leasing control was “not in the best interest of the port or the commonwealth,” and suspended bidding.