Origin May Spend $2.76 Billion on New South Wales Power Assets, UBS Says

Origin Energy Ltd. is likely to spend A$3 billion ($2.76 billion) for New South Wales state electricity assets, including retail business EnergyAustralia, and sell shares to help finance a transaction, UBS AG said.

AGL Energy Ltd., Australia’s largest electricity retailer, may spend A$1.5 billion on state assets, potentially including retail operation Country Energy, David Leitch, an analyst at UBS in Sydney, said in a report. Bids are due Nov. 1, he said.

Origin and AGL are “both likely big winners from NSW electricity privatization,” he said. It’s unclear if TRUenergy Holdings Pty Ltd., part of Hong Kong’s biggest electricity supplier CLP Holdings Ltd., or other companies are interested in bidding, he said.

New South Wales aims to complete the sale of assets by the end of the year, the government said in May. The state seeks to sell three retailers, among other assets, and to introduce at least one new entrant to the local electricity market.

Australia’s election outcome has made the country even more likely to impose a price on carbon emissions, giving companies in the gas generation industry more certainty, Leitch said. The Labor Party’s Julia Gillard held on to power as Australia’s prime minister after gaining support from two independent lawmakers and the Greens. Gillard agreed to set up a climate change committee with the goal of introducing a carbon price to reduce pollution from greenhouse gas emissions.

UBS upgraded its rating of Origin shares to “buy” from “neutral,” according to the report dated yesterday.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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