Bank of China contributes to a $3.3 billion AUD syndicated loan to finance the partial privatization of VicRoads

Project narrative

Circa August 20, 2022, a syndicate of 19 banks — including the Bank of China (BOC) and the Industrial and Commercial Bank of China (ICBC) — entered into a $3.3 billion AUD ($2.3 billion USD) syndicated loan agreement agreement with an unspecified special purpose vehicle — jointly owned by Aware Super, Australian Retirement Trust and Macquarie Asset Management, the investment arm of Macquarie Group Limited — to finance the partial privatization of VicRoads. Record ID#110865 captures BOC's contribution. Record ID#110866 captures ICBC's contribution. In addition to BOC and ICBC, the following lenders contributed to the loan syndicate: Australia and New Zealand Banking Group (ANZ), Canadian Imperial Bank of Commerce (CIBC), Crédit Agricole Corporate and Investment Bank (CACIB), DBS Bank, Ltd., HSBC, ING Group N.V., Intesa Sanpaolo S.p.A., KEB Hana Bank, Korea Development Bank (KDB), MUFG Bank, Ltd., National Australia Bank Limited (NAB), Norinchukin Bank, Oversea-Chinese Banking Corporation, Limited (OCBC Bank0, Standard Chartered Bank plc, Sumitomo Mitsui Banking Corporation (SMBC), Sumitomo Mitsui Trust Bank, Limited (SMTB), and Westpac Banking Corporation. The proceeds were to be used by the borrower to finance the partial privatization (acquisition) of the State of Victoria's motor registry, VicRoads, specifically the registration and licensing (R&L) and custom plates (CP) (customer service unit) business at Victoria's Department of Transport (DOT). VicRoads maintained the registers of more than six million vehicle operators and five million driver license holders, including cars, motorcycles, heavy vehicles and boats in Victoria. VicRoads had over $4 billion AUD in annual fees. On July 1, 2021, consortium signed a deal with the Government of Victoria to acquire the right to operate the licensing, registration, and custom plates business of VicRoads in a joint venture for a period of 40 years for a consideration of $7.9 billion AUD ($5.43 billion USD) via the transfer of two special purpose trusts (Victorian R&L Services Trust and Victoria CP Services Trust) and their trustee companies (R&L Services Victoria Pty Ltd and CP Services Victoria Pty Ltd). The consortium's bid was the result of a 15-month process including consultation with VicRoads workers, unions, motorist groups, and other stakeholders. The State Government of Victoria retained a $1.2 billion AUD share in the joint venture.. The State Government of Victoria would continue to own VicRoads and would continue to control regulation and policy, data and privacy provisions and essential fee prices, with information to remain in Australia. The Victorian Ombudsman and Office of the Victorian Information Commissioner would continue to provide oversight. The privatization was promised to improve customer service systems, CP services and user-friendly R&L, support the information technology modernization process, improve Victoria's road safety role, and to protect jobs of existing VicRoads employees while creating over 120 new jobs to oversee the partnership. VicRoads would continue to operate state-wide under that brand, no claims of impact to Victorians accessing the services. The sale proceeds were to be used by State Government of Victoria to invest in its new Victorian Future Fund to manage its pandemic debt, and the State Government of Victoria was to slash licensing and online testing costs and reward safe driver behavior as part of the new privatization with learners and probationary licenses and online testing to be free. The privatization was expected to close by mid-August 2022. The privatization was completed on August 15, 2022. When the deal was announced, the Victorian Greens party criticized the Victorian Labor Government's decision to privatize VicRoads as evidence of its addiction to privatization to service debt and putting money over the Australian people in exchange for higher fees, worse customer services, and fewer jobs and less wagers for workers. Originally, the government had attempted to modernize VicRoads, but attempts went $135 million AUD over the $158 million AUD budget. Previously, the State Government of Victoria moved to privatize VicRoads, but abandoned such efforts until after the COVID-19 pandemic, where the state had occurred large amounts of debt. The privatization was criticized on transparency grounds, with a selection process run by the Department of Treasury and Finance that was called "highly secretive" and little public information after the privatization; as of October 2024, there was no corporate plan, annual report, comprehensive service delivery, real-time performance reporting, or roadmap for technology upgrades available publicly, or information on what the chief executives of VicRoads were accountable for. The amount the Victorian government was giving VicRoads was unknown. The Australian Financial Review criticized the lack of accountability or public-facing governance, especially with little apparent improvement in VicRoads' services.