Industry super funds size up Victorian ports
IFM is a $46 billion fund manager owned by 30 industry super funds. It has $14 billion invested in infrastructure globally, including Melbourne's Southern Cross railway station and stakes in Port Kembla and Port Botany in NSW.
The Port of Melbourne is Australia's biggest port for container and general cargo. Based on the recent sale of long-term leases on two NSW ports, it could be worth about $6 billion. IFM chairman Garry Weaven told BusinessDay: "It's a big world we invest in, but if they felt the need to sell Victorian ports, Melbourne Port principally, then of course IFM would be right up there looking at the potential deal.
"We do think that in order to get governments to invest in the new public infrastructure that the country needs, it it necessary to recycle existing assets.
"And if you're going to do that, the logical owner of those assets would be the millions of members of Australian super funds."
He stressed any sale was a matter for the Victorian government.
A spokesman for Victorian Ports Minister David Hodgett said the state government had no plans to privatise the Port of Melbourne or Port of Hastings.
"We'd probably get approaches from time to time but we're not interested," he said.
And a sale is considered unlikely until there's clarity on the development of a third international container terminal at the Port of Melbourne. Asciano and DP World operate the two container ports.
Also expected to prevent a quick sale is the planned expansion of Hastings, which the government wants to develop as a second container port. An announcement on the successful bidder is expected in early 2014.
The other two major ports in Victoria, Geelong and Portland, are already in private hands. The comments come as state governments look to sell existing infrastructure to shore up their balance sheets and help build new infrastructure, and industry super funds advertise their deep pockets.
The NSW government is selling Newcastle Port, fresh from offloading long-term leases at Port Botany and Port Kembla for $5.1 billion to IFM, AustralianSuper, QSuper and Abu Dhabi Investment Authority. The sale price was 25 times Botany's earnings before interest, depreciation and amortisation.
The industry super lobbying group, the Industry Super Network, recently said that industry funds could invest $15 billion on infrastructure over the next five years.
The Port of Melbourne Corporation's last annual report said there had been record total port trade in the 2012 financial year and net assets of $1.6 billion, including cash assets of $54.2 million. The report showed Port of Melbourne Corporation reported operating profit after income tax of $99.8 million and paid $34.4 million in dividends to the Victorian government.
A confidential draft of the state government's Victorian freight plan, obtained by Fairfax Media, forecast that the Port of Hastings would in time eclipse the Port of Melbourne as the nation's biggest, handling up to three times as many shipping containers.
Frequently Asked Questions about this Article…
IFM is Australia’s biggest infrastructure investor — a $46 billion fund manager owned by 30 industry super funds with about $14 billion invested in infrastructure globally. The article says IFM has flagged interest in adding Victorian ports, especially the Port of Melbourne, to its existing NSW port holdings as part of its strategy to invest in large transport assets.
According to the article, based on recent long‑term lease sales of two NSW ports, the Port of Melbourne could be worth about $6 billion if it were put up for sale.
The article reports that IFM, AustralianSuper, QSuper and the Abu Dhabi Investment Authority bought long‑term leases for Port Botany and Port Kembla for $5.1 billion. The sale price was about 25 times Botany’s earnings before interest, depreciation and amortisation (EBITDA).
A spokesman for Victorian Ports Minister David Hodgett told the article the state government had no plans to privatise the Port of Melbourne or Port of Hastings. He said they would likely receive approaches from time to time but are not interested in selling.
The article highlights two constraints: uncertainty over development of a third international container terminal at the Port of Melbourne (Asciano and DP World currently operate the two container ports) and the planned expansion of Hastings as a second container port. These issues make a rapid sale less likely.
IFM’s chairman is quoted in the article saying recycling existing public assets into private ownership could fund new public infrastructure, and that the logical owners of such assets would be members of Australian super funds. Industry groups also say industry super funds could invest large sums in infrastructure (the Industry Super Network suggested up to $15 billion over five years).
The article notes the Port of Melbourne Corporation’s latest annual report showed record total port trade in the 2012 financial year, net assets of $1.6 billion (including $54.2 million in cash), an operating profit after tax of $99.8 million, and $34.4 million in dividends paid to the Victorian government.
A confidential draft of the Victorian freight plan cited in the article forecast that the Port of Hastings could eventually eclipse the Port of Melbourne as the nation’s biggest, potentially handling up to three times as many shipping containers. The government plans to develop Hastings as a second container port, and an announcement on the successful bidder for that expansion was expected in early 2014.
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