EQT in race for Alinta Energy’s WA assets as Gina Rinehart weighs tilt

Alinta Energy’s Newman Power Station.

Private equity firm EQT is believed to be lining up to buy Alinta Energy’s West Australian assets, while the interests of billionaire Gina Rinehart are also believed to be considering a tilt.

The official sale process for the Alinta assets was recently launched through investment bank Goldman Sachs.

DataRoom understands that suitors now have access to a data room to assess the offering, with first round offers due in about five weeks.

At least five contenders are taking a look.

Sources say Ms Rinehart’s company Hancock Prospecting is weighing its options, while Swedish private equity firm EQT is probably exploring an acquisition through its infrastructure arm.

EQT has reportedly been snapping up renewable energy assets in Europe and has been active in the Australia market in the recent past.

Hancock is a major Alinta customer in the Pilbara, along with BHP and Fortescue Metals.

All the customers are expected to have a look, providing the opportunity to control the assets, but this could cause problems for the sale, with customers concerned about who ends up owning them.

APA is considered the most logical buyer and is known to be interested, given it already jointly owns a WA pipeline with Alinta.

Queensland sovereign wealth fund QIC and Foresight Group Holdings, which last year purchased Mike Fitzpatrick’s Infrastructure Capital, both have infrastructure holdings and are likely to be suitors.

On offer is the majority of Alinta Energy’s Pilbara operations, with Alinta retaining operational control and a minority stake.

In Western Australia’s Pilbara region, Alinta owns the Newman Power Station, which 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.

It also an 11.8 per cent stake in the 1380km Goldfields Gas Pipeline, transporting natural gas from Carnarvon basin producers in the northwest of the state to Kalgoorlie in the southeast.

The remainder of the pipeline is owned by APA.

The power station is fired by gas and diesel but the investment is pitched as an energy transition story with the asset moving towards cleaner fuel.

The power station accounts for about 15 per cent of Alinta’s earnings before interest, tax, depreciation and amortisation.

Some contracts were 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 revealed last year it was searching for a buyer of the company.

As well as Goldman Sachs, UBS and Lazard were at one stage offering assistance.

Last year, Chow Tai Fook was seeking a price that valued the whole business at $4bn.

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.