* Infrastructure assets draw interest from domestic, foreign
* States happy to sell off assets to supplement declining
* Proceeds to be invested by state government in NSW
(Adds details, comments)
SYDNEY, April 12 Australia's New South Wales
state government has sold the long-term leases on two major
ports to a consortium led by Industry Funds Management
(IFM) for A$5.07 billion ($5.35 billion).
The winning bid for the pair of 99-year leases on Port
Botany and Port Kembla was significantly higher than anticipated
following a hotly contested auction.
Australian infrastructure assets are in strong demand thanks
to a relatively stable economy, attracting interest from both
domestic and overseas pension funds and sovereign wealth funds.
State governments are obliging by selling off long-term
leases on a variety of assets to supplement declining tax
The New South Wales government last May signed a A$2.3
billion deal with a consortium of Ontario Teachers' Pension Plan
and Hastings Funds Management for the long-term lease of a
desalination plant in Sydney.
The same consortium was a rival bidder for the two ports,
along with another group comprising Alberta Investment
Management, Canada Pension Plan Investment Board, QIC and
Australia's Future Fund.
The IFM-led consortium, NSW Ports, also includes local
pension fund AustralianSuper and Tawreed Investments Ltd, a
wholly owned subsidiary of the Abu Dhabi Investment Authority.
"With over 80 percent ownership by Australian industry
superannuation funds, the investment will benefit the
superannuation savings of an estimated 5 million Australians,"
IFM Chief Executive Brett Himbury said in a statement.
Port Botany and Port Kembla are essential infrastructure
assets that serve as the primary import and export gateways to
New South Wales state, Australia's largest economy and home to
approximately one-third of the nation's population.
Port Botany in Sydney is the only container-handling
facility of scale in the state, while Port Kembla, located
around 90 kilometers south of Sydney, is the country's largest
vehicle import facility and serves as a key export facility for
coal and other bulk products.
The state government said the sale was the largest deal it
had secured in terms of net proceeds, adding it would invest
around A$4 billion of the proceeds in the state's infrastructure
fund, Restart NSW.
"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," New South Wales Treasurer Mike Baird
said in a statement. "Releasing mature assets so that we can
re-invest in new ones is the responsible approach."
The NSW Ports consortium and the state government are
working to ensure a smooth transition of operations when the
deal closes at the end of next month, state government officials
The state government will retain regulatory oversight of the
ports as well as responsibility for several maritime safety and
($1 = 0.9468 Australian dollars)
(Reporting By Jane Wardell; Editing by Matt Driskill)