The Herald understands a Ports of Auckland IPO is being discussed in merchant banking circles. Photo / Supplied
The Herald understands a Ports of Auckland IPO is being discussed in merchant banking circles. Photo / Supplied
High level discussions are under way over the future of Ports of Auckland as Auckland Mayor Phil Goff wrestles with how to fund the city's ballooning infrastructure costs.
But Goff is refusing to be drawn on whether he plans to sell the council's ownership stake, saying only he wants to address the port's long-term future this term.
The Herald understands an IPO, or initial public offering, of the port is being discussed in merchant banking circles. Either a sale of the operating company or a part sale of the entire entity is understood to be under discussion.
Goff would only say he has had wide-ranging discussions on Auckland's port but no specific proposal on ownership has been presented to him.
Auckland Chamber of Commerce chief executive Michael Barnett said last night he was aware of discussions around the port's future.
It would make "real commercial sense" to sell the business and retain the land, Barnett said.
"Auckland Council can still regulate and can still control what happens there, if they wanted to retain an interest, but it would help them put money on table to invest in urgently needed infrastructure," Barnett said.
The council owns 100 per cent of Ports of Auckland through Auckland Council Investments Ltd (ACIL). It most recently valued the company at $1.1 billion.
Ports of Auckland has paid $201.9m in dividends and capital returns to ACIL since 2011, including $42.2m last year.
But the dividends for Aucklanders from selling the port and using the money to invest in sewerage, water, housing or transport could be far greater, Barnett said.
"There's a huge amount of private capital available in New Zealand: we've got ACC, NZ Super, iwi investment, and then there's huge international interest in assets like ports. I think the council could get a good price."
Infrastructure New Zealand chief executive Stephen Selwood agreed, saying the business community was "very supportive" of the idea.
"It seems to us silly for the council to be tying up monetary assets and effectively crowding out private sector investment when the money could be better used."
Retaining strategic ownership of the land and selling the operating license would be the most logical move, he said.
Councillor Mike Lee, who secured the final 20 per cent of shares in Ports of Auckland in 2005 as chairman of the former Auckland Regional Council, said he was giving Goff the benefit of the doubt.
"But if the rumours are true I think it would be an appalling betrayal and not what Aucklanders voted for,' Lee said.
City Vision councillor Cathy Casey said there would be no ports sale "on my watch".
Right-wing councillor Dick Quax said he would be comfortable retaining the port land and selling the business, saying it was a palatable option that would still bring income to the council from leasing the land.
"It makes sense. It removes the conflict of the council being both the regulator and owner. It releases a lot of capital and we are in a capital-constrained situation at the moment.
"We don't have any money for anything," Quax said.
On the election hustings last year, Goff said he would not sell council's 22 per cent shareholding in Auckland Airport but left open the door to sell the port business.
He said the 77 hectares of prime waterfront port land should be owned permanently by the people of Auckland and the port business should continue in council ownership, pending long-term decisions on the future of the port.
I've made no decisions about the port's long-term future as yet.
Since coming to office, Goff has struggled to find new revenue sources to fill a $4b funding hole for transport in the next decade and meet the needs of a rapidly growing city.
His desire for a regional petrol tax has been ruled out by the government and a proposed "bed tax" has been watered down with no guarantee of getting over the line in next month's budget.
Asked under the Official Information Act if he had been made aware by officers or other parties about an IPO sale, a response said: "The strategic issues relating to the Port has been raised with the mayor by officers on occasion as part of their normal advisory role.
"No specific proposals has been shared with the mayor," said the response, which did not answer questions about the names of officers and parties he had discussed the issue with and what written records or verbal recollections he had.
Pressed further on the issue, Goff said in a written statement he had had wide-ranging discussions on the port "but no specific proposal on the port's ownership has been presented to me.
"I've made no decisions about the port's long-term future as yet, but intend to make progress on this matter over the course of this term," Goff said.
Any sale of port shares would require public consultation, and could be part of next year's long-term budget.
