RREEF drops anchor in Geelong Port as Aussie fund exits(2)

The Australian Infrastructure Fund has divested its 35% stake in Victoria’s largest regional port for A$25m. The buyers were RREEF Infrastructure – which picked up 15%, increasing its ownership of the port to 50% – and Asciano, the port’s operator, which purchased the remaining 20%.

The Australian Infrastructure Fund (AIX), which is managed by Hastings Funds Management, has sold its entire stake in Port of Geelong, Victoria’s largest regional port, to RREEF Infrastructure and Asciano, the port’s operator.

The deal is part of AIX’s strategy of divesting non-core assets as it seeks to refocus its portfolio solely on airports, which now make up some 96 percent of AIX’s portfolio by asset value. AIX said the deal will net it A$24.9 million (€20.1 million; $26.6 million) in cash, just above the A$24.8 million an independent valuation exercise attributed to AIX’s 35 percent stake in the port on June 30, 2011. In addition, AIX will also get “a distribution of the net income and franking credits generated by [the port] for the period from July 1, 2011 to [deal] completion”. 

RREEF Infrastructure, which has been a shareholder in Port of Geelong since 1996, will buy 15 percent of AIX’s holding, increasing its ownership of the port to 50 percent. Asciano, which operates the port, will acquire the remaining 20 percent of AIX’s holding. The deal is set to close on February 29.

RREEF, which said it is making the purchase “on behalf of [one of its] major Australian institutional clients,” highlighted that Port of Geelong “has performed exceptionally well, delivering strong cash distributions and capital growth to our client”. That view is shared by AIX, which pointed out that its investment in Port of Geelong, completed in September 2000, “is expected to have generated a total average return since inception of 23 percent per annum”.

AIX said in a recent results presentation that it will continue to divest non-core assets. It also said that it has hired Credit Suisse and Citi to advise the fund on how it can maximise value for its shareholders. “This includes whether restructuring the management of AIX would be in the best interests of securityholders and if so, on what basis,” the fund said in a statement. 

RREEF has recently been active in Australia, acquiring a 40 percent stake in a Brisbane gas distribution business from APA Group.