NSW sale price takes Ausgrid enterprise value to $20.7bn

Of the overall $16bn price for Ausgrid, $8.7bn was equity.

The New South Wales Government has achieved a price for Ausgrid that took its overall enterprise value to $20.7 billion, according to sources.

NSW Premier Mike Baird today announced the sale of a 50.4 per cent long-term lease in the nation’s electricity distribution network, Ausgrid, to AustralianSuper and IFM, in a deal that will reap $16.189bn for the government.

The sale price equates to 1.4 times Ausgrid’s regulated asset base and 15.2 times its earnings before interest, tax, depreciation and amortisation.

In the sales process run for the operation earlier this year, it was understood that State Grid was offering to pay more than $16bn or 1.5 times to 1.7 times its regulated asset base for the stake and Cheung Kong Infrastructure, around $12 to $14bn.

However, Treasurer Scott Morrison blocked both bidders from buying the asset in the final stages of the process on the back of national security concerns.

The latest transaction comes after Hastings-backed consortium’s bid for Transgrid, which was sold for 1.6 times RAB.

Comparables to Ausgrid are currently trading at 1.2 times the group’s regulated asset base, according to some sources.

While it is unclear whether the offer was higher than State Grid’s offer, it has been described as competitive.

In total, the bidders wrote out a cheque for $4.6bn, refinancing all of the debt on the asset worth $12bn, equating to $16.189bn in net proceeds after stamp duty.

All of the $12bn worth of debt on the entire asset was refinanced by 15 lenders, including Australia’s top four banks and Societe Generale.

It leaves $8.7bn of equity in the business, equating to a 60 per cent gearing ratio.