The Infrastructure Fund, managed by Macquarie Asset Management, is set to put more assets on the block in the new year to meet redemption requests from investors, and one coming into focus is the Port of Newcastle.
The port is owned by TIF and China Merchants, which each have half-stakes. It handles almost 5000 ship movements and 166 million tonnes of cargo annually.
It is believed that investment bank Citi has been working on the background, preparing for a port sale on behalf of TIF next year.
The asset was sold for $1.75bn in 2014 to TIF and China Merchants, but the big question is what value buyers will now place on the asset heavily involved in the export of coal.
TIF was established in June 1998 with the Gold Coast Airport as its single asset. It has grown a diversified portfolio of infrastructure investments, including ports, airports and electricity transmission assets.
It was previously managed by Westpac’s Hastings Funds Management.
TIF assets include Queensland Airports and Perth Airports (where TIF’s holdings are currently for sale), North Queensland Airports and the Sydney Desalination Plant. TIF also owns 20 per cent of the NSW state land title and registry business.
In 2018, a transfer of the Port of Newcastle ownership by 50 per cent owner China Merchants Union to the publicly listed China Merchants Port Holdings placed an equity value of $1.2bn on the port, which banking sources said was in line with the value at the time of the 2014 deal.
Macquarie Asset Management is looking to sell assets within the TIF fund to deal with redemption requests from its investors, which are looking to cycle out of low-returning assets into higher yielding opportunities.
Some investors are also looking to reduce their exposure to particular asset classes like ports and airports, believing they are too exposed.
The last major port asset transaction in the Australian market was the sale of the GeelongPort to Stonepeak and Spirit Super for $1.1bn.
That asset generated $60m of annual earnings before interest, tax, depreciation and amortisation.
Citi is believed to be aiding TIF. It is also advising Abertis on its efforts to buy a stake in the Melbourne toll road EastLink, in conjunction with JPMorgan.
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