Spirit Super's Aussie port deal tackles anti-trust concerns
Australian superannuation fund Spirit Super and US-based infrastructure investor Stonepeak’s deal to acquire GeelongPort Pty Limited (GeelongPort) is likely to fare better in the path to transaction closing, with fewer anti-competition hurdles.
The deal comes three months after the superannuation fund’s first attempt to acquire the port earlier this year fell through.
The purchase -- signed for an undisclosed amount -- is understood to be worth approximately $745 million (A$1.1 billion). Alternatives investment firm Stonepeak and Spirit Super will take a 70% and 30% stake in the Australian port asset respectively.
The reconstituted consortium does not include Palisade Investment Partners, while Stonepeak does not have any other relevant investments in Australia, a source close to the deal told AsianInvestor. All parties are confident that the transaction has a clear path to completion, the source said.
COMPETITION CONCERNS
The previous attempt to sell GeelongPort by former owners State Super and Canadian asset manager Brookfield to a consortium comprising Spirit Super, Palisade and CSC ended after the competition watchdog raised concerns that Palisade’s stakes in multiple ports could reduce competition.
The deal was contingent on a review and go-ahead by the Australian Competition and Consumer Commission (ACCC).
Palisade is the sole owner and operator of the nearby port of Portland. Along with Geelong, Palisade’s stakes in both ports may – over the medium to long term – reduce competition between Portland and Geelong in servicing bulk cargo customers, the ACCC noted.
The port of Geelong is a bulk commodity port in Victoria. It is Victoria’s largest bulk commodity port, handling approximately 40% of Victoria’s bulk freight, according to a September 1 note by legal firm Gilbert + Tobin.
“The ACCC’s review was ongoing since the proposed acquisition was announced in January 2022, and had not yet reached a conclusion by August 2022, when the sunset clause expired,” the source told AsianInvestor.
“As such, the vendors and the consortium took a pragmatic view about whether to proceed with the transaction and mutually agreed to discontinue the transaction,” the source said.
The transaction with Spirit Super and Stonepeak will be subject to customary regulatory approvals and is expected to be completed late in the first quarter of 2023.
“We’ve been pleased with the level of interest shown in this high-quality, strongly performing asset. GeelongPort’s importance to the local and state economies and future potential has been well recognised by the Consortium’s approach. We believe the agreement represents an excellent outcome for our members,” State Super CEO John Livanas said in a statement.
The deal highlights the increasing scrutiny that Australian Supers face in acquiring port assets.
“Superannuation and other investment funds have interests in many of Australia’s infrastructure assets. The issue of common fund management and ownership among competing firms, including via minority interests, has increasingly become a focus of regulators and policy makers,” noted Gina Cass-Gottlieb, ACC chair in a Ports Australia conference on September 1.
“Parties proposing to acquire interests in Australia’s critical infrastructure can expect a careful and thorough ACCC review as the long-term consequences for competition can be very significant.”