Global Infrastructure Partners may be about to write a large cheque for a 40 per cent stake in Jemena, but it appears to have hit the brakes when it comes to selling out of Pacific National.
Sources have told DataRoom that the $2.5bn-plus sale process for GIP’s 27 per cent stake in the Pacific National business has been suspended for now, amid challenging conditions in the logistics industry, fuelled by higher costs in a weaker economy.
The price Global Infrastructure Partners was after equated to about 14 times the company’s earnings, but the understanding is that bidders were not prepared to pay up.
It is understood there were three suitors in the mix for the asset, and at least one made a non-conforming offer.
Pacific National is Australia’s largest private rail freight company, owned by GIP, CPP Investments, CIC and British Columbia Investment Management Corporation.
Its divisions include bulk, coal, intermodal and steel.
The business was previously part of the listed logistics company Asciano that underwent a buyout and break-up involving Canadian private equity firm Brookfield.
Investment bank JPMorgan has been working on the sale.
According to IBISWorld, Pacific National Holdings Pty generated $2.3bn of revenue to June, in line with the previous corresponding period, and earnings before interest, tax, depreciation and amortisation of $610m, down from $694.8m in the previous corresponding 12 months.
Net profit was $56.8m, compared to $151.7m in fiscal 2022.
In its books, it has an enterprise value of $3.3bn.
The hope is that once Pacific National’s contract win from Aurizon is taken into account, buyers will recognise its true value when it returns to the market for sale.
The move to suspend the sale comes as Global Infrastructure Partners is about to be revealed as the buyer of Singapore Power’s 40 per cent stake in the Jemena gas business, paying Singapore Power about $2bn.
Global Infrastructure Partners, which has a low cost of capital and owns other gas-related assets, is understood to have lenders in place to fund an acquisition, which as of late last month was said to be priced around $1.8bn, but it’s apparently been walked up by the vendor.
The asset, up for sale through Goldman Sachs, is on Singapore Power’s books for $1.6bn.
Jemena owns Australian energy infrastructure assets including gas pipelines and gas and electricity networks in Victoria, NSW, Queensland and the Northern Territory.
China’s State Grid owns 60 per cent and Singapore Power the remainder.
Enormous demand for Aussie bond
An Australian Government Bond issue has drawn an extraordinary $76bn in demand.
Back in black: Greenlit Brands’ Fantastic news
The owner of the Freedom Furniture and Fantastic Furniture chains, Greenlit Brands, has moved into profitability and is now better placed for a potential trade sale or listing.