Australia’s NSW state kicks off $10 billion energy sale
Australia’s New South Wales state kicked off its much-anticipated A$13 billion ($10 billion) energy sale on Thursday, with keen interest expected from Canadian and Australian pension funds as well as Chinese state-owned enterprises.
State treasurer Gladys Berejiklian said the country’s most populous state will give potential bidders until July 14 to register their interest to buy 49 percent of power transmission company TransGrid.
Combined with stakes in two state-owned electricity distribution networks, the sale – collectively known as “poles and wires” – is expected to be Australia’s biggest privatisation. The proceeds are earmarked to fund a host of major infrastructure projects.
“The poles and wires transaction will unlock A$20 billion which will be invested into new roads, rail, hospitals and schools, new sports and cultural facilities, and vital water infrastructure in our regions,” Ms Berejiklian said.
The TransGrid stake alone could fetch at least A$6.4 billion ($4.9 billion) with leverage levels of up to 90 percent given the steady income stream and monopolistic nature of the company according to banking sources involved in the process.
The sources were not authorised to speak publicly due to the sensitive nature of the sale.
Potential bidders include Australian Super bidding with Canada Pension Plan Investment Board, and Austrian plastics and fertiliser maker Borealis with Goldman Sachs and Morgan Stanley as financial advisers, according to investment industry sources familiar with the sale.
Other possible bidders are a consortium led by Hastings Funds Management, Cheung Kong Group’s Spark Infrastructure , Abu Dhabi Investment Company, Kuwait Investment Authority’s Wren House Infrastructure and Canada’s Caisse de depot et placement du Quebec, with JP Morgan and RBC Capital advising, the sources have told Reuters.
Other possible bidders are Macquarie Group’s Macquarie Infrastructure and Real Assets Fund as well as a consortium comprising China Southern Grid and Global Infrastructure Partners, an unlisted infrastructure fund run by former Credit Suisse bankers.
Interest could also come from State Grid Corp of China with HSBC advising, according to the sources, who added that they expect consolidation among the bidding consortia given the crowded field.
Deutsche Bank and UBS are advising New South Wales on the sale.
