Josh puts kybosh on Hong Kong buyout of gas pipeline operator
A BID by a major Hong Kong property and infrastructure group to buy Australia’s biggest gas pipeline operator for $13 billion has been scuttled by Canberra.
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A BID by a major Hong Kong property and infrastructure group to buy Australia’s biggest gas pipeline operator for $13 billion has been scuttled by Canberra.
In his first major foreign investment decision, federal Treasurer Josh Frydenberg has said the buyout of APA Group by an arm of Cheung Kong Group would be contrary to the national interest.
“I have formed this view on the grounds that it would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business,” Mr Frydenberg said late Wednesday.
APA was a “unique company” with a wide range of investors in Australia and led by local management, he said.
“It is by far the largest gas transmission system owner in Australia, owning 15,000km of pipelines representing 56 per cent of Australia’s gas pipeline transmission system, including 74 per cent of New South Wales and Victorian pipelines and 64 per cent in the Northern Territory.
“It also supplies gas for part of all mainland capital cities’ consumption, gas-fired electricity generation assets and liquefied natural gas exports.”
Mr Frydenberg said his views were “preliminary”, but he is widely expected to formally block the buyout. A final decision is due in two weeks.
The Treasurer’s move comes after the Australian Competition and Consumer Commission give the deal the green light in September.
Mr Frydenberg said the ACCC had not considered the concentration of foreign ownership of gas pipeline assets as part of its assessment.
He said he had formed his view after taking into account an analysis by the Foreign Investment Review Board and the Critical Infrastructure Centre.
The latter — a unit of the Department of Homeland Affairs — was set up early last year to develop risk assessments around critical infrastructure.
The CK group of companies, founded by Hong Kong’s richest person, Li Ka-shing, is already the biggest foreign owner of Australian utility assets and provides gas to 1.3 million homes and businesses.
It bought former APA rival Duet for $7.4 billion last year and owns Australian Gas Networks, CitiPower and Powercor.
The group is also one of the biggest owners of freehold agricultural land in Australia. Its proposed APA takeover would have been its biggest foreign acquisition.
During the bidding process, it rejected as “fictitious” any suggestion it was under any influence from the Chinese government.
It is not the first time CK has had its local ambitions thwarted — in 2016 it was blocked by the federal government from buying NSW electricity distributor Ausgrid.
Mr Frydenberg said his decision was not an adverse reflection on the CK group or on investment from any particular nation.
“The Australian government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy,” he said.
“The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country.”
Shares in APA have risen by about 16 per cent since the bid — to buy the group outright for $11 a share — was lobbed in July.
The Treasurer’s statement was made after the stockmarket closed on Wednesday.
Shares in APA last traded at $9.51.
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