NSW Government to sell Ausgrid for $16bn to Australian consortium

FOLLOWING Canberra’s ban on the sale of NSW’s poles and wires to a Chinese consortium, the state Government has found a new multi-billion dollar bidder.

An earlier agreement to see Ausgrid to Chinese investors was blocked by Canberra.

THE NSW Government will sell the state’s electricity distributor to an all-Australian consortium after a previous bid by a duo of Chinese firms was knocked backed on security grounds.

Premier Mike Baird on Thursday announced poles and wires operator Ausgrid will be sold for $16.189 billion to a consortium of IFM Investors and superannuation fund AustralianSuper.

Mr Baird said the sale would help fund $20bn of new infrastructure projects in the state.

“Our poles and wires transactions are unlocking billions of dollars to fund new schools, hospitals, public transport and roads that will make a real difference to peoples’ lives,” he said.

Treasurer Gladys Berejiklian said that as the bidders were home grown there was no-need for approval from the Foreign Investment Review Board (FIRB).

“This is an outstanding result and it is great to see a completely Australian consortium investing in this asset,” Ms Berejiklian said.

Logo of Ausgrid, NSW’s state owned electricity distributor. Supplied

In August, Federal Treasurer Scott Morrison rejected the proposed $16bn sale of NSW’s poles and wires to a consortium of China’s State Grid and Hong Kong based Cheung Kong Infrastructure due to security concerns.

This was despite the FIRB clearing the deal and State Grid already having stakes in several Australian power firms including the ACT’s ActewAGL distribution and Victoria’s Aus Net.

Trade Minister Steven Ciobo said the decision to deny the Chinese firms a controlling stake in Ausgrid was not about the bidder themselves but about the asset up for sale, and whether it was a Chinese or Canadian bidder would not have made a difference.

Cheung Kong owns a majority stake in power distributors in Victoria and South Australia.

Formerly NSW-owned power retailer EnergyAustralia is owned by Hong Kong-based China Light and Power.

Ausgrid contractors at work. Picture: Braden Fastier

Canberra’s blocking of the previous deal caught the Mike Baird led NSW Government off guard and raised questions about overuses investment in Australian companies.

With the two Chinese companies blocked, it opened the door for other firms to make rival — and cheaper — bids for Ausgrid.

Names in the frame included the Queensland Investment Corporation (QIC), AMP Capital and Hastings Funds Management, as well as the US-based Global Infrastructure Partners.

The NSW Government will retain a 49.6 per cent of Ausgrid and will have an ongoing role as the lessor of the business and an investor. Ausgrid will continue to be regulated by the Australian Energy Regulator which determines network prices.