Australia Grid Sale Draws Local Bid After Foreigners Barred

  • Consortium of AustralianSuper and IFM Investors makes offer
  • State Grid, CKI previously barred on national interest grounds

The controversial selloff of a majority stake in an Australian state-owned power network has been revived with a proposal submitted by local investors one month after offers from two separate foreign bidders were blocked.

The New South Wales government, which owns the asset, said in an e-mailed statement Friday that it received an unsolicited bid from pension fund AustralianSuper and IFM Investors, Australia’s largest infrastructure fund. It didn’t reveal the value of the offer, although the 50.4 percent stake the government is looking to offload was previously expected to fetch more than A$10 billion ($7.6 billion).

IFM Investors said it moved with an early offer for Ausgrid in keeping with the state government’s desire to bank the proceeds of a sale by the state’s budget in June 2017.

“It’s a quality asset. They want to get something approved by the end of the year,” said IFM Investors Chief Executive Officer Brett Himbury in a phone interview with Bloomberg. “We believe our bid is unique because we represent an all-Australian consortium.”

The move by IFM and AustralianSuper follows a decision by federal Treasurer Scott Morrison to scupper separate offers from State Grid Corp. of China and Cheung Kong Infrastructure Holdings Ltd., whose bids were deemed to be against Australia’s national interest.

‘Unsolicited Proposal’

New South Wales Premier Mike Baird said on Friday a cross-agency panel would “thoroughly assess” the proposal. “The government can receive unsolicited proposals at any time and has a thorough process in place to assess such proposals,” he said.

State Treasurer Gladys Berejiklian said the Ausgrid sales process has yet to be formally restarted and a final decision on the Australian bid would be made later this year. She said the latest proposal indicates there is “strong market interest” in the asset which supplies power to 1.6 million homes and businesses in and around Sydney.

IFM indicated it may consider an offer for Ausgrid in August shortly after the two foreign bidders were knocked back by the Australian government. 

Ausgrid Suitor

A consortium including IFM Investors unsuccessfully bid for the A$9.7 billion Port of Melbourne deal. The Victorian government on Monday handed the contract to an alternative group of investors including QIC Ltd, which has also been linked as a suitor for Ausgrid.

IFM and AustralianSuper hold a raft of major infrastructure assets in Australia and partnered in 2013 to buy Port Botany and Port Kembla from the NSW government in a A$5.07 billion deal.

Morrison’s knock back of the State Grid and CKI bids in August sparked a warning from China that the move will hurt bilateral ties. Australia has been balancing the need for foreign investment to drive economic growth against mounting public opposition to sales of farmland, real estate and strategic infrastructure, particularly to Chinese investors.

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