Brookfield Asset Management Inc.’s infrastructure arm will seek more Australian acquisitions, after Canada’s largest asset manager agreed to acquire rail and port operator Asciano Ltd. in an A$8.9 billion ($6.53 billion) deal.
Brookfield Infrastructure Partners will see more opportunities arise as Australia and its state governments privatize assets, chief executive officer Sam Pollock said in a phone interview. Companies such as miners, energy producers and industrial firms have been divesting infrastructure and more such sales are coming, he said.
“There will be so many future development opportunities that will come to market, as the economy recovers and the government continues to encourage private investment,” Pollock said. “There will be billions of dollars of capital required in this market.”
Foreign investors have been buying Australian transport and infrastructure assets amid a decline in the local currency and a government push to encourage asset sales. Japan Post Holdings Co. agreed to purchase logistics operator Toll Holdings Ltd. in February for A$6.5 billion, while a consortium including China Merchants Group Ltd. acquired Newcastle Port last year for A$1.75 billion.
Container Terminal Sale
New South Wales state is selling power transmission network TransGrid, while Victoria plans to sell the Port of Melbourne, the country’s busiest container terminal. Brookfield would consider bidding for Australian Rail Track Corp., which owns the country’s track infrastructure, if the federal government decides to sell it, Pollock said.
Brookfield expressed interest in other infrastructure assets sold recently, including Crown Castle International Corp.’s Australian mobile phone towers and the Investa commercial property portfolio owned by a Morgan Stanley fund, Pollock said.
“There is an infrastructure deficit in almost every country, and it’s especially true in some of the developed economies like Australia and North America,” he said. “We believe we are just at the start of this process.”
Fortescue Metals Group Ltd., the nation’s third-largest iron ore producer, attempted in 2013 to sell a minority stake in its rail and port infrastructure. Australian builder Leighton Holdings Ltd. agreed that year to sell control of its telecommunications assets to Ontario Teachers’ Pension Plan for about A$620 million.
Santos Ltd. and a venture between Origin Energy Ltd. and ConocoPhillips have been planning sales of infrastructure assets in Australia, people familiar with the matter said earlier this year. BG Group Plc agreed in December to sell an Australian pipeline for $5 billion.
Brookfield Asset Management said Monday it will buy Asciano through its publicly traded subsidiary Brookfield Infrastructure Partners for A$6.94 a share in cash and 0.0387 Brookfield Infrastructure units. Brookfield Infrastructure will hold 55 percent of Asciano, while other Brookfield funds will have 23 percent. Singapore sovereign fund GIC Pte and British Columbia Investment Management Corp. will take the remaining 22 percent.
Asciano fell 0.1 percent to A$8.685 at 10:25 a.m. Wednesday in Sydney. That’s 5.1 percent below the implied value of Brookfield’s offer of about A$9.15 a share.
The Asciano transaction, which adds Australian container terminals with Brookfield’s ports in North America and Europe, would be its largest takeover. Asciano operates Patrick, a stevedoring business, at ports including Melbourne, Sydney and Brisbane and offers freight services through its Pacific National rail business.
Brookfield Infrastructure, which is based in Bermuda and trades in New York and Toronto, owns utilities, transport, energy and communications infrastructure in North and South America, Europe and Australia. It owns the Westnet rail business in Western Australia state and controls the Dalrymple Bay Coal Terminal in Queensland.