CIC Capital, China’s sovereign wealth fund, is among a consortium of Australian and international investors that paid a whopping $9.7 billion for a 50-year lease on Australia’s busiest port on Monday.

The Queensland Investment Corporation (QIC)-led Lonsdale consortium won the contest to buy the Port of Melbourne, beating out bids from groups led by Macquarie Infrastructure and Real Assets, and Industry Funds Management.

CIC Capital will hold a 20 per cent stake in the port through global fund manager GIP.

The price paid far exceeded the Victorian government’s $7 billion estimate, which state Treasurer Tim Pallas put down to a lack of other good options in equity markets.

“I think we’ve been very lucky in terms of timing, let me be frank,” Mr Pallas told reporters. “Couldn’t have picked a better time to go to the market.” 

The injection of funds is a timely one for Daniel Andrews’ Victorian government, which has pledged to spend $970 million of the sale price on regional and rural infrastructure projects in the lead-up to the 2018 state election.

As well as the QIC and China’s CIC, investors in the Lonsdale consortium include the federal government’s Future Fund and the Canadian pension fund, OMERS.

No federal government bonus

Victoria had hoped for a further $1.45 billion – equivalent to 15 per cent of the sale price – from the federal government under its asset recycling scheme.

That bonus looks unlikely after a spokesman for Treasurer Scott Morrison said on Monday the asset recycling scheme closed to new deals on June 30 and uncommitted funds had been returned to the budget.

“An agreement was not finalised with Victoria, despite them having the time to do so,” the spokesman said in a statement.

He said the federal government will still work with Victoria to determine how $877.5 million of asset recycling funds already set aside for Victoria could be allocated.

Legislation to lease the Port of Melbourne passed the Victorian Parliament in March, after months of political wrangling.

Mr Pallas said $900 million from the sale would also go towards regional infrastructure and $200 million for agriculture and the rural jobs fund.

Mr Andrews said the sale would create a windfall of thousands of jobs.

“This is a massive vote of confidence, an almost $10 billion vote of confidence, in what is without any doubt the strongest-performing economy in our nation,” he said.

The sale has already been signed off on by the Australian Competition and Consumer Commission and Foreign Investment Review Board, Mr Andrews said.

“This represents extraordinary good value for Victorian taxpayers,” he said.

Farmers say proceeds should go to make exporting easier

Victorian Farmers Federation vice–president Brett Hosking said the bulk of the state’s grain was exported from the Port of Melbourne.

The Mallee grain grower said he hoped the proceeds from the sale of the port would make it easier for farmers to get their grain from the paddock to export ships.

Mr Hosking said the government had pledged 10 per cent of the sale price would go to regional Victoria.

“That [money] hasn’t been allocated other than to say it’s for infrastructure projects,” he said.

“[If] you are going to cash in a major piece of infrastructure, you want to make sure you’re building infrastructure somewhere else, making sure the state is growing.”

Victorian Greens leader Greg Barber warned local exporters would pay a heavy price for the port’s privatisation.

“The bigger the sale price the bigger the long-term damage to our export economy,” he said.

“These new owners will want a return on investment and that will come from squeezing Victorian exporters.”

-with ABC