South Koreans keen on coal terminal

 

At least one Korean pension fund is believed to be lining up to buy Brookfield’s Dalrymple Bay Coal Terminal which could be offloaded for about $2bn.

Korean funds such as KDP Kiamco, the National Pension Service, Korean Military Mutual Aid Association, MIRAE and POBA are all said to be flush with cash and eager to put their money to work.

It comes as Korean funds KDP Kiamco and the Korean Teachers Credit Union are said to be rivalling AMP Capital’s efforts in securing Morrison & Co’s PIP Fund, one that carries a price of more than $300m.

South Korean companies are some of the terminal’s most valuable customers, shipping the commodity back to a country which is one of the largest steel manufacturers in the world.

South Korea and Japanese entities are shaping up this year to be among the biggest spenders in the infrastructure space, where existing owners are expected to trade out of major assets, making way for new Asian owners with access to cheap debt.

Korea’s NPS was one of the acquirers of the Port of Melbourne when it was for sale in 2016. The bidders will compete for DBCT as Brookfield also weighs an initial public offering for the asset.

Working on the sale are Bank of America and HSBC while Credit Suisse and Citi are involved in the potential listing.

Brookfield will weigh a potential float to determine if the public market will be keen to pile in to an investment being pitched as defensive and stable.

A successful IPO would involve fund managers shrugging off negative sentiment towards coal caused by concerns about climate change.

Government regulators, including the Foreign Investment Review Board, will also have a role.

The DBCT is one of Queensland’s major metallurgical coal export facilities, where between 20 per cent and 30 per cent of the coal leaving the terminal is of the unpopular thermal variety.

Indicative bids for the asset are scheduled for late February and bidders are thought to include Global Investment Partners and CK Infrastructure, advised by Morgan Stanley.

An investor roadshow took place last year and binding bids are due in the middle of this year.

One factor to consider is whether the coronavirus slows down the process, as is expected to be the case for most IPOs undertaking global roadshows through Asia.

Elsewhere, the $2.40 per share bid for National Storage REIT by the US-based and Morgan Stanley-advised Public Storage is considered by some in the market as a knockout price, so it will be interesting to see if it gets topped by existing suitor Gaw Capital Partners or Warburg Pincus, which is also circling.