The $140bn infrastructure manager IFM Investors is believed to be entering the contest to buy an interest of up to 49 per cent in Sydney’s WestConnex roading project, taking on hot favourite Transurban.
The Queensland Investment Corporation and Macquarie Infrastructure and Real Assets are also said to be assessing potential bids.
Transurban and its consortium backers, including the Canada Pension Plan Investment Board, AustralianSuper and the Abu Dhabi Investment Authority sovereign wealth fund, bought a 51 per cent interest in the 33km Sydney toll road project in 2018 for $9.26bn and have pre-emptive rights to buy the other half, making it the clear frontrunner.
In 2018, IFM took on Transurban and its consortium partners in the competition, but it is understood that its bid was $2bn off the pace from the winning number.
Since that time, the WestConnex asset is thought to have increased in value, and a key consideration for IFM will be whether it is prepared to rethink its valuation estimates of the infrastructure offering to outpace Transurban.
The Australian listed toll road operator Transurban is cashed-up after last week announcing that it had sold a 50 per cent stake in its US highways in the greater Washington area for $2.8bn to Australian and Canadian superannuation investors.
AustralianSuper will take a 25 per cent stake with Canada’s CPPIB at 15 per cent and UniSuper to own 10 per cent.
All three already work with Transurban on Australian toll road projects.
However, some market analysts say Transurban investors are prepared to support a capital raising to fund a WestConnex acquisition.
Last time IFM bid for WestConnex, it worked with Citi and Bank of America.
However, this time around Lazard could be well placed to work with the Australian infrastructure investor.
Lazard recently offered advice for a potential acquisition of Shell’s infrastructure assets at the Curtis Island LNG plant in Queensland.
In the last competition for a stake in WestConnex, IFM was bidding with Canadian pension fund OMERS, but this time it is believed to be assessing the merits of vying for WestConnex alone.
Some say it could join forces with MIRA and QIC further down the track.
Transurban is currently working with investment banks Morgan Stanley and UBS, but if it brings in Macquarie as an adviser, as it has done in the past, MIRA may bow out to avoid any conflicts.
The NSW government is selling its 49 per cent stake in WestConnex in two separate tranches to create competitive tension in the auction, run by Citi and RBC.
Each 24.5 per cent interest on offer is likely to sell for at least $4bn. The idea is that more buyers are able to write a cheque of that size.
Registrations of interest are due in January and expressions of interest will be due by the end of March.
One condition of the latest deal is that the underbidder to the winner of the auction will receive compensation for lobbing a bid.
More Coverage
Mitsubishi Chemical joins BGC competition
Speculation is mounting that the Mitsubishi Chemical Group is pursuing the assets being sold by Buckeridge Group of Companies.
Metals Acquisition raises equity after passing on $1bn Portuguese acquisition
Metals Acquisition is understood to have been looking to buy Portuguese mine Neves-Corvo but has now moved on.