Transurban Group Buys Queensland Motorways for A$7.1 Billion

A consortium led by Transurban Group agreed to buy Australia’s Queensland Motorways Ltd. for A$7.1 billion ($6.6 billion) to gain control of a toll-road network in Brisbane.

QIC Ltd., the Australian state-backed fund manager which owns Queensland Motorways, agreed to sell it to the group comprising Transurban, local pension fund AustralianSuper Pty and Abu Dhabi Investment Authority, it said in a statement yesterday. The deal is expected to be completed by the third quarter, QIC said.

Australian infrastructure assets are attracting pension funds and other institutional investors because of their relative safety and steady cash flows. Other states such as New South Wales are selling assets including ports and electricity plants to release funds to spend on new infrastructure projects.

Transurban, which will run the Queensland Motorways network, will raise A$2.34 billion in a rights offer to fund the deal, it said in an exchange filing today. Shareholders will be offered 10 new shares at A$6.75 apiece for every 43 they own.

The company will raise another A$400 million from a sale of stock at A$6.95 each to AustralianSuper and Abu Dhabi Investment Authority, according to the filing. Shares of Transurban, which were halted from trading today for details of the equity raising, closed at A$7.27 yesterday in Sydney.

Hastings Bid

Queensland Motorways had attracted interest from four bidding groups. The unit manages a 70-kilometer (44-mile) network of toll roads, bridges and other infrastructure in Queensland state, including the Gateway, Gateway Extension and Logan motorways, according to the statement.

Transurban owns 62.5 percent of the consortium buying Queensland Motorways, according to yesterday’s statement. AustralianSuper holds a 25 percent stake, while Abu Dhabi Investment Authority has a 12.5 percent interest.

Hastings Funds Management Ltd. teamed up with Spain’s Abertis Infraestructuras SA and APG Groep NV, Europe’s largest pension fund manager, on a bid for Queensland Motorways, people with knowledge of the matter said in January. Abertis was “confident” its bidding group would win the asset, Chief Financial Officer Jose Aljaro said in a Feb. 26 interview.

IFM Investors Pty bid with Canada’s Borealis Infrastructure Management Inc. and Singaporean wealth fund GIC Pte, people with knowledge of the matter said last month. Employees Provident Fund, Malaysia’s biggest sovereign wealth fund, and UEM Group Bhd. also made a joint offer, people with knowledge of the matter said April 14.

Legacy Way Tunnel

Transurban, Australia’s biggest operator of toll roads, controls assets in Sydney, Melbourne and the U.S. In 2010 it fought off a A$7.2 billion takeover offer from CP2 Ltd., a group led by Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan.

Queensland Motorways had a valuation of A$3.1 billion including debt when it was transferred from government ownership to QIC in May 2011. Since then it has acquired the Go-Between Bridge and Clem7 Tunnel and agreed to buy the tolling rights for Brisbane’s Legacy Way tunnel, due to start operation in 2015.

IFM and Abu Dhabi Investment Authority led a group of investors in April last year that paid A$5.1 billion to lease Port Botany, the nation’s second-biggest container terminal, and Port Kembla. Melbourne-based Hastings and Ontario Teachers’ in May 2012 together won the right to lease the Sydney Desalination Plant for 50 years for A$2.3 billion.

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