Carlyle, Goldman steam into Port of Virginia

A high-profile, long-term leasing proposal has met a challenge from two major private investment groups, whose proposals will now be considered alongside the bid submitted by CalPERS-backed real estate firm CenterPoint in March. At stake is what could become the first long-term lease of an entire US port.

The deadline to submit proposals for the operation of the Port of Virginia expired at 10am today, with investor groups backed by The Carlyle Group and Goldman Sachs, respectively, stepping forward to challenge industrial real estate developer CenterPoint Properties for a concession of the East Coast port.

At deadline, the Virginia Port Authority received two other bid proposals – one from The Carlyle Group and another from a partnership between Carrix and Goldman Sachs.

The Carlyle Group is a global private equity firm which manages a $1.15 billion infrastructure fund co-headed by New York-based Barry Gold and Washington DC-based Robert Dove. 

Carrix is the parent company of SSA Marine – a Seattle-based stevedore, a ship loading and unloading company.

Investment bank Goldman Sachs manages a $6.5 billion infrastructure fund, Goldman Sachs Infrastructure Partners I, and is currently in the process of raising a second infrastructure fund targeting $7.5 billion as well a European infrastructure fund targeting €3 billion. New York-based Steven Feldman co-heads the firm’s infrastructure group.

Their proposals will now be considered alongside the bid submitted by Chicago-based real estate firm CenterPoint in March. CenterPoint, a subsidiary of a company ultimately owned by the California Public Employees' Retirement System, laid out a proposal to lease the port's facilities for 60 years in exchange for an upfront cash payment of $500 million. 

CenterPoint estimated the value of the proposal, including revenue sharing, annual payments, capital expenditure and other commitments, to be at least $8.9 billion. Key principals on the bid include CenterPoint’s chief executive officer, Michael Mullen, president Paul Fisher and vice presidents Neil Doyle and Matt Mullarkey.

Under Virginia’s Public-Private Transportation Act, the submission of that proposal set off a 120 day period during which other interested parties could submit competing proposals. That period has now ended.

Next, the Virginia Secretary of Transportation will evaluate the two additional proposals to determine whether they meet the requirements necessary for consideration. If so, they will be posted on the Port of Virginia website alongside the CenterPoint proposal, which was publicly disclosed on 27 March.

The bidding is set to become the third major high-profile contest over port assets by infrastructure investors in the last year, indicating that the sector is attracting strong interest from the private sector despite the softer cargo volumes resulting from the recession.

Further up on the East Coast, Highstar Capital-backed Ports America and New York-based Alinda Capital Partners were recently shortlisted for the development of the Seagirt Marine Terminal at the Port of Baltimore.

On the West Coast, bidding over the Port of Oakland’s outer harbor terminal concluded in March with Ports America emerging victorious for the 50-agreement valued at $700 million. Ports America beat out Maher, APM, Ports America, Hutchison and a K-line-led consortium for the concession.

The next round of bids is expected to be submitted before 4 September.