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Three Bidders for Australia's Port of Melbourne

By MarEx 2014-11-26 02:28:00

Three of Australia's largest infrastructure funds plan to bid for the country's largest container terminal in a sale expected to fetch about A$5 billion ($4.27 billion) for Victoria state, a source with knowledge of the process said on Wednesday.

The prospect of three bidders suggests Victoria, Australia's second most populous state, will reap a hefty price for the asset and encourage other Australian states looking to sell a combined A$130 billion of assets in the next 18 months.

Pension fund IFM Investors has hired investment banks JPMorgan Chase & Co and Barclays Capital to prepare a bid for Port of Melbourne, while a consortium of Hastings Funds Management Ltd and Kuwait sovereign fund Wren House Infrastructure Management have hired UBS AG, the source said.

Queensland state fund QIC Ltd is also expected to appoint a bank to place a bid, said the source who spoke on condition of anonymity because they were not authorised to comment publicly.

Hastings declined to comment and IFM and QIC were not immediately available for comment.

A successful port sale in Victoria will be good news for other states hoping to sell assets to pay down debt and finance infrastructure. Governments of smaller Queensland and Western Australia state are also planning to sell container terminals.

The government of larger New South Wales state hopes to sell half the state electricity grid for an estimated A$20 billion, and promises to spend the proceeds on road and rail upgrades in Sydney.

Victoria, unlike NSW and Queensland, faces no political obstacles to the Port of Melbourne sale, with both major parties supporting the move ahead of an election on Nov. 29.

In April, Hastings and China Merchants jointly bought Australia's biggest coal terminal, Port of Newcastle in NSW, for A$1.75 billion.

In 2013, IFM and several other pension funds bought Port Botany in NSW for $A5.07 billion.

(1 US dollar = 1.1719 Australian dollar)

Copyright Reuters 2014.