IFM, AustralianSuper secure $12.3b Ausgrid deal

The two parties submitted an unsolicited bid for the asset in September. A month before that Australian Treasurer Scott Morrison blocked prospective bids from Cheung Kong Infrastructure and State Grid Corp. of China, citing national security concerns.

The NSW government will retain 49.6% of Ausgrid and continue as licensor and regulator for the business. The proceeds of the investment will go towards funding new infrastructure projects. It has taken a similar approach with other brownfield assets, having sold long-term leases on the TransGrid electricity transmission network, Port of Newcastle, as well as Port Botany and Port Kembla, all to private investors. It also extended the lease on Sydney's Westlink M7 toll road in return for the investors committing to the NorthConnex tunnel project.

There were foreign participants - though acting in partnership with other groups - in each of those deals, including China Merchants Group on Port of Newcastle. Since then, however, political sentiment on inbound investment from China in particular, or from entities seen as having ties to China, has soured. Notably, in May a Chinese consortium withdrew from an agreement to buy cattle station operator S. Kidman & Co. when the government indicated it would block the deal.

Ausgrid and its predecessors have been supplying electricity since 1904. The company operates one of the country's largest electricity networks, serving approximately 1.7 million homes and businesses across Sydney, Central Coast and Hunter regions. The network covers 22,275 square kilometers and comprises more than 200 large electricity substations, 30,000 small distribution substations, 500,000 power poles and almost 50,000 km of electricity cables.

"This is a new kind of ‘PPP' - a true pension public partnership. This pension public partnership makes Australian superannuation money available to build new infrastructure, improving standards of living and productivity. At the same time, the investment in Ausgrid will add to the superannuation accounts of over six million Australians," Brett Himbury, CEO of IFM Investors, said in a statement.

The A$10.26 billion TransGrid deal, which closed in late 2015, involved a consortium featuring Hastings Fund Management, Caisse de dépôt et placement du Québec (CDPQ), Abu Dhabi Investment Authority (ADIA), Kuwait Investment Authority and Spark Infrastructure. IFM was said to have submitted a rival bid with QIC, while State Grid Corp. and Macquarie, and AustralianSuper also competed for the asset.

AustralianSuper, which has more than A$100 billion in assets, was successful in the A$5.07 billion Port Botany and Port Kembla transaction in a consortium alongside IFM, ADIA, Construction & Building Industry Super, HOSTPLUS and HESTA. IFM is owned by 29 superannuation funds and manages more than A$72 billion across infrastructure, listed equities, debt investments and private capital. Its infrastructure assets cover energy utilities, airports, seaports, toll roads and electricity generation.

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• Topics
• Australasia
• Industrials
• Infrastructure
• Infrastructure
• Buyouts
• Australia
• energy