DataRoom AM: Port of Melbourne push

The Victorian government has outlined its plans for Port of Melbourne's sale, while a takeover bid for mining engineering firm Bradken is on shaky ground.

The privatisation of Medibank Private topped the deals agenda last year and 2015 is also shaping up to be a year dominated by government infrastructure sales as NSW and Queensland hive off power and port assets. Not to be left behind, however, is Victoria with its Port of Melbourne sale, an auction that now appears set to run for much of the year.

Elsewhere, funding issues raise doubt about a Bradken takeover, Independence Group eyes a bigger slice of the giant Tropicana gold mine and Queensland may kick off its privatisation program with a port sale.  

The new Labor government in Victoria has sent details of its auction plans for Port of Melbourne to interested parties as part of its push toward a $5 billion sale. According to The Australian Financial Review, the government is seeking expressions of interest by late February ahead of the first round of bids due in mid-May and a final offer deadline of August.

The six-page information document has been sent to several major local infrastructure investors including IFM InvestorsQIC and Hastings Funds Management, with the nation’s busiest port set to also draw plenty of interest from offshore pension and sovereign wealth funds. The final sale structure is still unclear, however.

Meanwhile, the prospect of an $872 million takeover offer of Bradken succeeding is looking increasingly unlikely as the iron ore price continues its retreat. Analysts are worried that Bain Capital-Pacific Equity Partners will abandon their offer due to funding issues in the current environment. A binding bid has yet to be forthcoming as the two suitors continue to discuss terms with lenders.

In resources, there is a growing expectation that local miner Independence Group could gain a greater slice of the Tropicana gold mine in WA from joint venture partner AngloGold Ashanti. Independence approached AngloGold about the purchase of part of its 70 per cent Tropicana stake late last year and while it was quickly rebuffed, the AFR reports that a 20 per cent purchase to make them 50-50 partners could be on the cards. Such a deal may be worth upwards of $300m.

In infrastructure, the Port of Gladstone is likely to be the first asset sold by the Queensland government should the LNP be re-elected this weekend, according to the AFR. The Newman government’s five-year privatisation program could reap close to $50bn if market conditions are strong, with a long-term lease for the Port of Gladstone tipped to be worth $1.5bn-$3bn.

Elsewhere, a potential merger between Recall and US-based rival Iron Mountain remains on the backburner as Recall holds out for a better offer. An offer with an increased cash component may get a deal done, but an agreement appears unlikely in the short-term.

Finally, Morgan Stanley analysts have made a call for Suncorp to raise its growth potential via an acquisition of listed health insurer NIB, while giant Chinese conglomerate Fosun has again expanded its Aussie footprint with a deal to buy a $116.5m office tower in North Sydney.

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