Hastings consortium wins $7.5b Australia electricity grid lease

Hastings, as manager of Utilities Trust of Australia, will hold a 20.02% stake in TransGrid, with CDPQ taking 24.99% and ADIA 19.99%, according to a release. The other investors are the Kuwait Investment Authority and locally-listed energy and infrastructure manager Spark Infrastructure with 19.99% and 15.01%, respectively.

Rival bids were submitted by State Grid Corporation of China in conjunction with Macquarie, AustralianSuper, and IFM Investors and Queensland government-owned QIC, The Australian reported.

TransGrid is the owner and operator of the main high voltage transmission network in New South Wales and the Australian Capital Territory, connecting generating, distributors and major end users to the grid. This network comprises 99 bulk supply substations and more than 12,900 kilometers of transmission lines and cables.

New South Wales Premier Mike Baird said the proceeds of the 99-year lease on TransGrid will be used to pay for schools, hospitals, public transport and roads. The government plans on leasing out 49% of the state electricity network with a view to raising A$20 billion. The partial lease of Ausgrid is expected to be completed by mid-2016.

With institutional investors often wary of backing greenfield infrastructure projects - after several tunnel and toll road public-private partnerships from the early 2000s were undone by over-optimistic traffic forecasting - state governments are increasingly privatizing brownfield assets to finance new builds.

An estimate shared with AVCJ in mid-2014 put the value of infrastructure assets to be privatized over the next 2-3 years at anywhere between A$50 billion and A$100 billion. Several electricity assets are expected to be put on the block as well as various ports and pipeline businesses.

Hastings and China Merchants Group secured a 98-year lease on Port of Newcastle in 2014 for A$1.75 billion, while the previous year leases for Port Botany and Port Kembla were sold for A$5.07 billion. The buyer consortium included IFM, ADIA and three local superannuation funds.

In February it was announced that Canada Pension Plan Investment Board (CPPIB), QIC and toll road operator Transurban Group would commit A$2.9 billion to Sydney's NorthConnex tunnel project. This is a greenfield project but the risk was mitigated by extending the lease on the Westlink M7 toll road, a brownfield asset already owned by CPPIB, QIC and Transurban.

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• Topics
• Buyouts
• Infrastructure
• Infrastructure
• Australasia
• Australia
• Infrastructure
• buyout
• Hastings Funds Management
• Abu Dhabi Investment Authority (ADIA)