NSW government fields unsolicited Ausgrid proposal

IFM and Australian Super have lobbed an unsolicited bid for Ausgrid believed to be worth at least $10 billion.

Unconfirmed reports have suggested the consortium is working with Macquarie Capital as an adviser.

It comes after the NSW Government today announced it had received an unsolicited proposal for the partial long-term lease of Ausgrid from a consortium comprising AustralianSuper and IFM Investors.

The offer is being described as one that is competitive and one that would not require Foreign Investment Review Board Approval.

IFM and AustralianSuper said in a short statement the “all-Australian proposal” was “unique and represents excellent value for the NSW government”.

“AustralianSuper and IFM Investors are pleased to jointly submit this unique proposal and, if we are ultimately successful, intend to manage the asset in a responsible, considered manner over the long term,” said Ian Silk, chief executive of AustralianSuper and Brett Himbury, chief executive, IFM Investors.

Terms of the bid would remain confidential, he said.

Previously, DataRoom revealed that Macquarie had been working with a consortium of Australian bidders to vie for Ausgrid, which included IFM. At the time, it was thought that Australian Super, Macquarie Infrastructure and Real Assets and QIC may have also been involved.

However, it is now understood that QIC is not within the mix.

The Queensland investment fund was among the winning consortium that this month paid $9.7bn for The Port of Melbourne.

Ausgrid – the electricity distribution business owned by the NSW state - has been subject to a sale process earlier this year through UBS and Deutsche.

In recent months it came close to a conclusion with Cheung Kong Infrastructure out of Hong Kong and State Grid out of China as the two final competitors in the contest, offering more than $12bn and between $14bn and $16bn for the asset respectively.

However, Treasurer Scott Morrison stunned them with his decision to block that transaction last month.

“In making this decision, national interest concerns have been paramount,’’ he said at the time.

“They relate to the transaction structure as currently proposed and the nature of the assets.’’

It was the second significant move to block the sale of Australian assets to Chinese interests this year after Mr Morrison foiled a Shanghai Penxin play for control of pastoral group S. Kidman & Co in April.

Since that time, Chinese suitors have abandoned plans to buy the state owned assets, with the Australian-only IFM-backed consortium plotting to acquire the operation.

Canadian suitors were widely perceived to be permissible given that Canada is already part of an alliance with Australia that shares sensitive information.

In a statement today, Premier Mike Baird said the Government was obliged to consider all unsolicited proposals based on their merit.

As part of the standard process for unsolicited private sector proposals, the NSW Government has established an experienced cross-agency panel to thoroughly assess the proposal.

“The Government can receive unsolicited proposals at any time and has a thorough process in place to assess such proposals,” Mr Baird said.

NSW Shadow Treasurer Ryan Park hit out at the government, saying the “whole process has been completely botched” and urged the state to continue with its auction process regardless of Friday’s bid.

“The bungling of this transaction will no doubt cost the taxpayer substantially and I would be very concerned if there wasn’t a competitive bidding process underway going forward because that would no doubt impact on the price and that’s bad news for NSW taxpayers,” Mr Park told The Australian.

Treasurer Gladys Berejiklian noted that while the Government would give the proposal full consideration, preparations to re-launch the Ausgrid transaction were continuing.

“This unsolicited proposal is another indication of the strong market interest for Ausgrid,” Ms Berejiklian said.

A final decision regarding the unsolicited proposal is expected to be made later this year.

Action at Ausgrid follows this week’s stunning $9.7 billion divestment of a lease on the Port of Melbourne by the Victorian government, a deal on which IFM Investors was the underbidder.

With Michael Roddan