The New South Wales Government yesterday announced the successful lease of the Port of Newcastle for $1.754 billion to winning bidders Hastings Fund Management and China Merchants.
The Port of Newcastle is the world’s largest coal export hub and the newly signed 98 year lease also includes tracts of land including part of the old BHP Billiton site.
The price of $1.754 billion is well above the $700 million the NSW Treasury had originally valued the lease at but also well above the $1 billion price tag that sources say the government had been hoping for.
The winning bid for the Port of Newcastle, at 27 times earnings, compares favourably with the $5.07 billion price NSW Ports (a consortium lead by Industry Funds Management) paid for the 99 year lease of Port Botany and Port Kembla in 2013. The price is also in line with the multiple QIC received from the sale of infrastructure assets to Transurban last week.
The sale is important for the Government on a number of fronts as it delivers a financial war chest at a time when the new Premier, Mike Baird, is readying himself for the next state election on March 28, 2015.
Already, a substantial amount of money has been promised to Newcastle with Baird confirming yesterday that: “$340 million from the proceeds will be used for the revitalisation of the Newcastle CBD, in addition to the $120 million the Government has already allocated to the project, which includes a new light rail service.”
Baird confirmed that “the remainder – more than $1.2 billion – will be invested in the NSW Government’s dedicated infrastructure fund, Restart NSW.”
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