KKR, OTPP, PSP to buy Australia's Spark Infrastructure for $7.2b
KKR, Ontario Teachers’ Pension Plan (OTPP), PSP Investments have agreed to buy Australia-listed Spark Infrastructure, which has extensive interests in electricity transmission and distribution, for an enterprise valuation of A$10.1 billion ($7.2 billion).
They will acquire every unit in Spark Infrastructure Trust for A$2.95 apiece, which includes pending interim and special distributions. The offer – which must be approved by security holders – gives Spark an equity valuation of A$5.2 billion, according to a filing.
KKR and OTTP made three bids over the course of July before Spark's board agreed to allow access for further due diligence. It was announced earlier this month that PSP had joined the consortium.
The target company has four key assets: 49% of SA Power Networks, which distributes electricity to 880,000 residential and commercial customers in South Australia; 49% of CitiPower and Powercor, which offer a similar service to more than one million customers in Melbourne and western Victoria; 15% of electricity transmission network TransGrid; and 100% of a solar farm in New South Wales.
Spark was a member of the consortium – alongside Kuwait Investment Authority (KIA), Utilities Trust of Australia, Caisse de depot et placement du Quebec (CDPQ), and Abu Dhabi Investment Authority (ADIA) – that acquired TransGrid in 2015 for A$10.3 billion. Another Canadian pension fund, Ontario Municipal Employees Retirement System (OMERS) bought KIA's 20% stake in July 2020.
The company's portfolio generated A$870.3 million in EBITDA for the 12 months ended December 2020, up from A$856.6 million a year earlier. Net profit rose from A$79.1 million to A$105 million. Electricity transmission and distribution – most of it supported by traditional coal-fired power – accounted for all but A$5.3 million of EBITDA.
However, Spark believes it is well-positioned to benefit from the transition to renewable energy because this will require significant investment in transmission to connect decentralized renewable energy assets and upgrades in distribution to enable smart meters and community batteries.
Meanwhile, the 100-megawatt solar farm is the sole operational asset sitting alongside a 2.2-gigawatt development portfolio spanning wind, solar, energy storage, and green hydrogen projects.
More on Australasia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.