Petronas, Babcock May Bid for Pipeline Trust Stake

Malaysia's Petroliam Nasional Bhd. and Babcock & Brown Ltd. are among the logical bidders for the stake in Australian Pipeline Trust, the nation's biggest owner of gas pipelines, which must be sold by Alinta Ltd., UBS AG said.

Diversified Utility & Energy Trusts and rival Australian energy transmission funds such as Spark Infrastructure Group (SKI), SP AusNet (SPN), Challenger Infrastructure Fund and Hastings Diversified Utilities Fund (HDF) may also bid, UBS said in an Aug. 7 report. Any offer by Babcock & Brown may involve Babcock & Brown Infrastructure Group, which is bidding with Australian Pipeline for GasNet Australia Group, it said.

Australia's antitrust regulator last week approved a proposed A$6.45 billion ($4.9 billion) asset and debt swap between Australian Gas Light Co. and Perth-based Alinta on condition that Alinta sell Australian Gas's 30 percent stake in Australian Pipeline, or APA. Petronas, Malaysia's state oil company, owns 10 percent of Sydney-based Australian Pipeline.

``We think the 30 percent APA stake will come up for auction 12 months after'' the transaction between Australian Gas and Alinta, Craig Stafford, a Sydney-based UBS analyst, said in the report. The timing of the sale will ``allow for more bidding tension,'' he said.

The 30 percent stake has a market value of A$349.7 million, based on Australian Pipeline's closing share price of $4.18.

First Right

Under the ruling Aug. 3 by the Australian Competition and Consumer Commission, Australian Gas, or AGL, has first right of refusal over the 30 percent stake in Australian Pipeline should Alinta sell it within 12 months. Australian Gas Chief Executive Officer Paul Anthony said in April that after the Alinta transaction the company will focus on generating and retailing energy in competitive markets rather than on transmission.

``We believe AGL is not interested in'' buying back the Australian Pipeline stake, UBS said.

Alinta is keeping the deadline for selling the 30 percent stake confidential, said Tony Robertson, a spokesman for the Perth-based utility.

Petronas is a partner with Australian Gas in a project to build a pipeline to pipe gas from Papua New Guinea to eastern Australia.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@Bloomberg.net.

To contact the editor responsible for this story: Jane Lee at jalee@bloomberg.net.

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