Image: Lemsipmatt.
Fruit and vegie markets usually aren’t the first things people think of when governments engage in asset sales, but the Western Australian government is planning to rake in some extra cash by selling off the Market City complex in Perth.
The Colin Barnett government has been on the hunt for public assets that could be sold off to the private sector, as part of its big strategy to reduce the need for borrowings and regain the state’s AAA credit rating.
Presently, the state is rated AA+ by Standard and Poor’s and Aa1 by Moody’s Investors Service, mainly due to the state government having to manage a debt outstanding of approximately $32 billion.
And while New South Wales has recently delivered an enviable surplus in its annual Budget, other states like WA would be keen to catch up.
That’s why the WA government has begun a huge asset sale beginning with the Market City complex in Canning Vale, which is a wholesale fruit and vegetable market that trades more than $500 million of fresh produce annually.
Market City is currently managed and owned by the Perth Market Authority, and Treasurer Mike Nahan reckons the sale of the facility offers a “significant opportunity” for private sector investment in the fruit and vegetable industry.
Mr Nahan said similar markets have transitioned to private ownership, with continued success across Australia.
“Potential buyers will be evaluated against their vision to manage and develop Market City in a way that contributes to the industry,” Mr Nahan said.
According to the government, the Department of Treasury supported by leading financial advisors Ernst & Young and Jones Lang LaSalle have evaluated the potential sale through a due diligence process.
The government has expressed its concern towards the potential impact the sale will have on tenants, which was a major consideration in the evaluation.
Food Minister Ken Baston said the state government was committed to supporting tenants with a number of measures designed to limit the potential impact of the sale.
Mr Baston said a key sale objective was the sustainable operation of the wholesale market, to ensure continued growth of the Western Australian fruit and vegetable industry.
“A number of conditions will be established as part of the sale process to ensure the continuation of the market for 20 years. This includes restrictions on the development of the land and protection of the central trading area,” Mr Baston said.
The government is seeking expressions of interest for Market City, with an EOI document to be released through Tenders WA in early July.
After the EOIs are evaluated, a a shortlist of respondents is expected to be finalised by late September, with a sale to be approved by the state government by early 2016.
