Alinta Energy is understood to be about to fire the starting gun on a sale process for its Pilbara operations after the company was informally on the market last year through investment banks.
It is understood Goldman Sachs is overseeing the latest sale process that sees Alinta seeking a passive investor to own the majority of its Pilbara operation, with Alinta retaining operational control and a minority stake.
In Western Australia’s Pilbara region, Alinta owns the Newman Power Station that includes a gas and distillate power station with a battery storage system.
It provides energy through a 220 kilovolt transmission line to the Roy Hill mine site, also in the Pilbara.
The power station has supplied the region with power for more than 40 years.
Passive investors that could be interested in acquiring the asset may be an Australian superannuation fund or a sovereign wealth investors such as the Queensland Investment Corporation.
However, some investors may shy away from a power station fired by gas and diesel with an aspiration for more clean energy investments.
The task for Goldman Sachs will be to pitch the investment as an energy transition story where the asset is moving towards cleaner fuel.
The power station accounts for about 15 per cent of Alinta’s earnings before interest, tax, depreciation and amortisation.
There were contracts set to expire last year.
Chow Tai Fook purchased Alinta – an Australian electricity generator and retailer – from TPG Capital in 2017 for close to $4bn, and DataRoom first revealed last year it had been searching for a buyer of the company.
As well as Goldman Sachs, UBS and Lazard were at one stage offering assistance.
DataRoom understands there had been some buyer interest in Alinta’s east and west coast assets, but not for the business as a whole, and there had been proposals discussed to merge with other energy providers. APA is known to have shown interest in parts of its WA business.
As of June 2020, Alinta was generating $3.4bn in revenue and $239m of net profit.
Alinta controls 85 per cent of the West Australian retail energy market and a raft of gas and coal-fired power assets, as well as some renewable energy assets.
Chow Tai Fook Enterprises is controlled by the wealthy Hong Kong jewellery family of Cheng Yu Tung and invests largely in real estate.
At the time it purchased Alinta, the company generated $420m of earnings before interest, tax, depreciation and amortisation and the price equated to 9.5 times EBITDA.
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