Iberdrola Decides Against Australia's Endeavour Offer

  • Spanish power firm had been weighing offer with local partner
  • Final bids for A$4 billion Endeavour Energy stake due in May

Iberdrola SA, Spain’s biggest power company, has decided against bidding for a majority stake in Australian electricity distributor Endeavour Energy that could be valued at more than A$4 billion ($3.1 billion), according to people familiar with the matter.

Iberdrola had been weighing a tie-up with a local partner to pursue a long-term lease of 50.4 percent of Endeavour, which is owned by the New South Wales government, the people said. Remaining bidders are studying detailed information on the company before submitting final offers that are due in May, according to the people, who asked not to be identified because the deliberations are private.

An investor group including Hastings Funds Management Ltd., Spark Infrastructure Group and Caisse de Depot et Placement du Quebec remains interested in buying the asset, which operates electricity distribution networks in New South Wales state, the people said. Macquarie Infrastructure & Real Assets is teaming with British Columbia Investment Management Corp. for a planned bid, while a consortium of QIC Ltd. and Canada’s Borealis Infrastructure Management Inc. has dropped out, the people said.

Iberdrola shares rose 0.5 percent to 6.48 euros as of 11:25 a.m. in Madrid, the stock’s highest level since February 2016.

Iberdrola Chief Executive Officer Jose Ignacio Sanchez Galan has expanded outside Spain, helping revenue triple in the past decade. The company continues to look at opportunities for acquisitions, Galan said in an interview with Bloomberg TV last month. Projects such as U.S. clean energy company Avangrid Inc. have contributed to rising profits, and Iberdrola said in January that it will invest about $600 million in a new power plant in Mexico.

Representatives for BCIMC, Borealis, the Caisse, Hastings, Iberdrola, Macquarie and QIC declined to comment. A spokesman for New South Wales Treasurer Dominic Perrottet also declined to comment, while a representative for Spark didn’t immediately return a phone call seeking comment.

Endeavour Energy is the third energy asset being offloaded in a A$20 billion selloff by New South Wales state to fund construction of projects including new roads and railways. The regional government sold distribution company Ausgrid to AustralianSuper and IFM Investors Pty last year, while a Hastings-led group agreed to buy TransGrid for A$10.3 billion in 2015. 

The sale comes as Australia balances 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.

— With assistance by Rodrigo Orihuela, Scott Deveau, Vinicy Chan, and Perry Williams

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