* Winning bid was higher-than-expected 27 times earnings
* Hastings and China Merchants equal partners in the bid
* Australian infrastructure assets in hot demand
(Recasts and adds details of the bid)
By Swati Pandey
SYDNEY, April 30 Hastings Funds Management and
China Merchants Group have won a state government auction for a
98-year lease on Australia's Port of Newcastle, the world's
biggest coal export terminal, paying a higher-than-expected
A$1.75 billion ($1.6 billion).
An initial New South Wales state budget plan had valued the
lease on the port terminal at A$700 million, but fierce
competition for Australian infrastructure assets coming on to
market has seen a steady rise in multiples paid.
The winning bid for Newcastle port came in at 27 times
earnings, matching the 27 times earnings Transurban Group,
Australia's biggest toll road owner, paid last week for a
Queensland state toll road firm.
That compares with multiples of 25 times earnings in a
A$5.07 billion deal for 99-year leases for Port Botany and Port
Kembla that was won by Industry Funds Management last year.
Local media have reported that other bidders for Newcastle
port included Hong Kong-listed Cheung Kong Infrastructure
, a consortium of New York-based Global Infrastructure
Partners and Deutsche Asset & Wealth management, Macquarie and
its partner China Construction, as well as a one from ATEC Rail
Group and fund manager TIAA-CREFF.
"It was an incredibly competitive field," State premier Mike
Baird told a news conference.
Hastings, an Australian firm with A$7.4 billion in funds
under management, and state-backed China Merchants were equal
partners in the bid, according to a statement from the Premier's
Hastings has a portfolio of utilities, airports, toll roads
and ports in Australia, Britain, Europe and the United States.
It was a partner in winning bids for a Sydney desalination plant
last year and Cairns and Mackay Airports in 2008.
China Merchants, which owns a wide range of transportation,
finance and property assets, had A$819 billion assets under
management as of end-December.
A record 142.64 million tonnes of coal was exported in
2012/13 from Port of Newcastle, up 17 percent from a year
earlier, according to its annual report.
At end-June 2013, the port had a net profit of nearly A$23
million and net cash flow from operating activities of A$27
Infrastructure assets such as toll roads, power stations and
ports are in hot demand from investors for their stable,
long-run returns and tough barriers to competition.
Australia's state governments, once hesitant to give up tax
revenue by selling infrastructure, have had a change of heart
since New South Wales sold its desalination plant for $2.3
billion in 2012.
The federal government said last month it would pay states
to sell assets as treasurers across jurisdictions agreed to do
more to lure local and overseas investors to take a slice of an
estimated A$100 billion in infrastructure.
The proceeds from the sale of Newcastle port will be
invested to build infrastructure in the state with 30 percent
directed towards projects in rural and regional areas.
($1=1.0789 Australian Dollars)
(Additional reporting by Jane Wardell; Editing by Edwina Gibbs)