Brookfield seeking $515m for Dalrymple Bay

Coal ships queued up at Hay Point and Dalrymple Bay Coal loading facilities. Picture: Daryl Wright

The Dalrymple Bay Coal Terminal is shaping up to list on the Australian Securities Exchange with a market value of $1.285bn, as owner Brookfield locks in Queensland Investment Corporation’s Future Fund as a 10 per cent investor and remains in search of an additional $515m from others.

The Canadian private equity firm is expected to lodge a prospectus on Thursday or Friday for a float of the $1 billion-plus infrastructure asset, for which it will continue to own 49 per cent once listed.

Based on the current preliminary numbers, which were yet to be finalised as of Monday, the market value of the terminal will be $1.285bn, with the total IPO size to be $643.5m, factoring in the $128.5m offered by QIC.

Other cornerstone investors were being sought on Monday, and shares were expected to be on offer at a price range of around $2 to $2.15 for the IPO.

It is understood that investors will be offered a yield of about 7 per cent for the asset.

QIC’s involvement in the float has been well flagged and it is understood that the move to lock in the Queensland state-owned investment vehicle is to alleviate any concerns about regulation.

Brookfield was earlier hoping to raise between $800m and $1bn for its IPO, with the terminal’s market value to be between $1.6bn and $1.7bn.

Credit Suisse analysts earlier suggested that the Queensland infrastructure asset was worth between $3.25bn and $3.56bn, including debt.

The understanding is that Brookfield has been targeting retail investors for the IPO at a time a number of institutional investors shy away from gaining exposure to assets linked to the coal industry.

Bank of America, HSBC, Citi and Credit Suisse are working on the float, while co-lead managers include Wilsons, Ord Minnett, Bell Potter and Morgans.

The DBCT is one of Queensland’s major metallurgical coal export facilities that handles about 20 per cent of the world’s seaborne metallurgical coal trade and will be sold with take or pay contracts in place.

Brookfield gained control of the terminal during the financial crisis in 2009 when it embarked on a $1.8bn recapitalisation of Babcock and Brown Infrastructure, which essentially comprised the DBCT.

QIC has $79bn of assets under management in Australia and the United States, including shopping centres, office buildings, airports, ports, motorways and renewable energy assets.

Meanwhile, Brookfield is on the brink of selling down shares in the terminal after apparently walking away from a plan to partner with Woodside Energy to buy Chevron’s $5.8 billion stake in the North West Shelf in Western Australia, according to sources.

It is understood that Woodside had been moving toward a plan to buy the asset with an infrastructure investor, and discussions with Brookfield were said to have been progressed, with the private equity firm in the box seat.

However, it is understood that the plan was off as of the weekend.

Another party that could look to partner with Woodside is GIP, although some suspect Woodside will likely move to bid for the asset on its own.

Earlier, the understanding was that GIP was also looking at the asset, along with Canada Pension Plan Investment Board and IFM, but some say that infrastructure funds are yet to show serious interest.

Brookfield was the previous owner of the West Australia-based oil and gas business Quadrant Energy with other investors, including Macquarie Group, before it was offloaded to Santos.

It is a keen infrastructure investor as well as a buyer of operating businesses through its private equity arm.

Woodside, advised by Gresham, has always been seen as the strongest contender to buy the 16.67 per cent interest in North West Shelf — the country’s largest resources development project — given that it operates the asset and also owns a stake that is the same size.

Investment bank UBS is working on the sale process, with first round bids due this month.