Port of Melbourne leased to Lonsdale consortium for $7.3bn
The Lonsdale Consortium has acquired a 50-year lease on Australia’s biggest port, thanks to a $7.3bn bid that far exceeded expectations
The Port of Melbourne, Australia’s biggest container and cargo port, has been leased to the Lonsdale Consortium for $7.3bn, as part of the Victorian Government’s ongoing privatisation programme. The group, which includes Chinese sovereign wealth fund CIC Capital, narrowly beat an IMF-backed consortium to acquire the 50-year lease.
“This is a $7.3bn vote of confidence in the Victorian economy”, the Premier of Victoria, Daniel Andrews, said of the deal.
In a media release confirming the sale, the Victorian Government announced that it would be using the proceeds of the lease to strengthen regional infrastructure and launch new transport initiatives. Funds from the sale will largely go to the Victorian Transport Fund, which seeks to establish the long-awaited Melbourne metro system, as well as improve the state’s 50 worst railway level crossings.
“Through this lease, we are supporting our state’s vibrant regional communities, putting infrastructure and agriculture back at the heart of Victoria’s economic development”, said Luke Donnellan, Victoria’s Minister for Ports. The planned infrastructure projects promise to create thousands of jobs in the region, with $151m from the lease earmarked for the Regional Jobs Fund.
Funds from the sale will largely go to the Victorian Transport Fund, which seeks to establish the long-awaited Melbourne metro system
The port, which attracts over 3,000 commercial ships each year, far exceeded expectations at auction, with the Victorian Government initially anticipating it to sell for around $5.3bn.
In an ongoing effort to cut debts and raise funding for new infrastructure projects, the federal government has been transferring public-owned assets to the private sector, with sales of ports accounting for a significant portion of privatisation deals. In 2013, the New South Wales Government generated $3.8bn from the sale of Port Botany and Port Kemblea, while the Port of Newcastle was leased to China Merchants Group and Australia’s Hastings Funds Management for $1.3bn in 2014.
The Port of Melbourne deal serves to further confirm China’s increasing interest in Australian infrastructure. In 2015, Shandong-based Landbridge Group secured a 99-year lease of Darwin Port, while an attempted Chinese takeover of the Ausgrid energy network was blocked by the Australian Government last month.
