The NSW government may be selling its 49 per cent stake in WestConnex in two separate tranches to create competitive tension in the auction, but some think there could be another reason for the approach.
Many of the major Canadian pension funds are understood to have already allocated a large amount of their portfolios to toll roads and don’t have the capacity to buy much more.
Transurban and its consortium backers, including the Canada Pension Plan Investment Board, 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.
Each 24.5 per cent interest on offer is likely to sell for at least $4bn, and more buyers are probably able to write a cheque of that size, including Macquarie Infrastructure and Real Assets, QIC, and major funds based in Canada.
However, some raise the prospect of the situation having the opposite effect, where Transurban and its backers have the firepower to pay a lot more.
Registrations of interest are due in January and expressions of interest will be due by the end of March.
IFM Investors was the underbidder in the contest for the earlier stake and some are sceptical that it will compete strongly for the asset this time around.
One condition of the latest deal is that the underbidder to the winner of the auction will receive compensation for lobbing a bid.
Some believe that the government may opt to retain the second stake on offer.
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