Port Botany

New South Wales Treasurer Mike Baird today announced the NSW Government has successfully leased Port Botany and Port Kembla to the NSW Ports Consortium.

NSW Ports Consortium comprises:

• Industry Funds Management (IFM),
• Australian Super,
• QSuper and
• Tawreed Investments Limited, a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

QSuper's investment in Port Botany and Port Kembla will be managed by Global Infrastructure Partners (GIP). GIP was initially involved as an equity investor in the consortium, but made the decision to take a reduced role earlier this year.

Following a six-month competitive bidding process, the 99-year lease of State-owned port assets Port Botany and Port Kembla has been awarded to the NSW Ports Consortium for $5.07 billion, with net proceeds of around $4 billion to be invested in the NSW Government's infrastructure fund - Restart NSW.

Baird commented on the deal:

"It is the largest ever NSW government transaction, in terms of net proceeds." The transaction has delivered an outstanding financial return for the state, including over $4.31 billion from the Port Botany transaction package and A$760 million from the Port Kembla transaction package.

Two other groups were reportedly in the running for the leases: one consisting of Ontario Teachers' Pension, Borealis Infrastructure Management Inc. and Hastings Funds Management; and the other comprising Alberta Investment Management, CPP Investment Board, QIC and Future Fund.

Baird also said:

"the financial challenges facing NSW are clear, given the decision by Standard & Poor's to change our triple-A credit rating outlook to negative. We inherited $55 billion of net debt, a $30 billion infrastructure backlog, and before the last Budget, NSW lost $5.2 billion in GST revenue.""While this win is a great start, it doesn't solve our problems. We are in the middle of a financial balancing act. We must continue to look at our balance sheet and take the responsible decisions necessary to return our state's finances to a sustainable position."

Mr Baird said a small number of Sydney Ports Corporation and Port Kembla Port Corporation employees would transfer to the port lessee.

The transaction is expected to close on 31 May 2013. Morgan Stanley was  the financial adviser to NSW Government. Lazard and UBS advised the winning consortium.

According to sources, debt financing is being provided by 10 banks, only two of which are Australian.

Source: NSW Government