IFM Investors is believed to be looking to refinance Port Botany and Port of Kembla, less than two years after leading a giant $5.1 billion bid for the two ports.
Lending sources said IFM and its coinvestors, including AustralianSuper and Abu Dhabi Investment Authority’s Tawreed Investments, were preparing to tap financiers for a fresh line of debt in coming weeks, seeking to improve the cost and extend the term of the existing $2 billion syndicated facility.
Investment bank UBS, which advised IFM’s bidding group on the April 2013 acquisition, is expected to oversee the refinancing.
Sources said IFM would seek to refinance loan with the ports’ existing financiers, including ANZ Banking Group and National Australia Bank and eight offshore banks such as Credit Agricole, Korea Development Bank and Sumitomo.
The deal comes as infrastructure asset owners across the market consider refinancing loans and making the most of favourable lending conditions and initiating deals before a glut of new infrastructure assets come to market mid-year.
Just as equity buyers are keen to park cash in ports, tollroads and regulated power networks in the low interest rate environment, the banks are also keen to sign deals and have bulked up infrastructure teams in an effort to increase exposure to the sector.
For the NSW Ports owners, it also makes sense to refinance their loans after about 18 months in charge of the company.
Lenders are reluctant to stump up cheap debt to fund acquisitions when new owners come in, preferring to wait one year or two and see whether new management can meet growth and cost-cutting targets. The ports are believed to be operating well under IFM’s stewardship, paving the way for a refinancing.
Elsewhere in ports, Queensland public servants’ superannuation fund QSuper is expected to take part in Port of Melbourne’s upcoming auction, backing Global Infrastructure Partners in its bidding group with Canada’s Borealis and fellow Queenslander QIC Ltd. QSuper is believed to be looking for opportunities outside of its home state after Saturday’s shock state election result kiboshed $30 billion of Queensland privatisations. The superannuation money manager has done well investing in ports alongside GIP, and has enlisted GIP as one of its four managers in the asset class.
Buyers were told the Port of Melbourne made $207 million earnings before interest, tax, depreciation and amortisation in 2013-14.