Investment group lands 50-year lease at Port of Melbourne

The Lonsdale Consortium, which comprises the Future Fund, QIC, Global Infrastructure Partners and OMERS, agreed to pay $9.7 billion Australian (U.S. $7.3 billion) to acquire a long-term lease to operate Australia’s largest container port.    Investment group the Lonsdale Consortium has acquired a 50-year lease to operate the Port of Melbourne in Australia for $9.7 billion Australian (U.S. $7.3 billion), according to statements from the group and the Victoria state government.
   The Lonsdale Consortium includes the Future Fund, Australia’s sovereign wealth fund; wholesale fund manager QIC; infrastructure real estate investment manager Global Infrastructure Partners (GIP); and OMERS Private Markets, which invests in infrastructure and private equity assets on behalf of the OMERS pension plan, one of Canada’s largest defined benefit pension plans.
   Under the agreement, the group said it will invest “substantial capital” to increase capacity at the port.
   The state government of Victoria plans to invest about 10 percent of the proceeds from the lease – A$970 million – in regional and rural infrastructure projects. In addition, the government established a new A$200 million Agriculture, Infrastructure and Jobs Fund in an effort to drive regional economic growth, boost exports, and support Victorian farmers.
   Members of the Lonsdale Consortium hold significant infrastructure interests across Australia, including stakes in the Melbourne Airport, Iona Gas Storage Facility, and the EastLink toll road. The groups are well versed in port ownership as well, with interests in the Port of Brisbane, NSW Ports, and Associated British Ports (ABP), the largest port operator in the United Kingdom.
   Australia’s largest container and multi-purpose cargo port, the Port of Melbourne, features more than 500 hectares of port land, including 36 commercial vessel berths on 21 kilometers of waterfront. The port handles about 2.64 million TEUs per year and more than 1,000 new automobiles each day on average.
   According to ocean carrier schedule and capacity database BlueWater Reporting, 22 direct region-to-region liner services call at Melbourne on a regular basis, as well as four intra-Oceania loops.
   Victorian Premier Daniel Andrews called the lease deal with Lonsdale Consortium a “$9.7 billion vote of confidence” in the state’s economy, which has been hit hard by falling mining revenues.
   “We promised to lease the port, get rid of Victoria’s most deadly and congested level crossings and create thousands of jobs, and that’s exactly what we are doing,” he said.
   “The strength of this result underlines the continued high performance of the Victorian economy – the fastest growing in the country,” added Treasurer Tim Pallas. “Leasing the port reinforces Victoria’s position as the freight and logistics capital of Australia and will make a great port even better.”
   Gresham Partners and Credit Suisse served as financial advisors to the Lonsdale Consortium, and Herbert Smith Freehills served as the group’s legal adviser.