Transurban to tap market for $2bn if it wins WestConnext bid

Transurban is said to be gearing up for a $2 billion capital raising to fund the acquisition of an interest in WestConnex should Australia’s largest toll road operator be successful in the competition for the Sydney motorway project.

It is understood that Transurban will go to the market seeking about $2 billion in equity.

However, some say the raising could be as high as $3bn, which is possible if the company takes the opportunity to secure additional cash for other projects.

Morgan Stanley and UBS will be working on the raising, which could be announced in days should the NSW government announce that Transurban is the preferred party for the project.

Other equity raisings are also expected to emerge over the reporting season as companies move to recapitalise.

Transurban owns 16 toll road assets in Australia, Canada and the US, and has one of the most impressive share registers among the ASX 200 companies, counting Australia’s top institutions among its investors.

Market analysts yesterday said that although speculation suggested that Transurban was looking to raise around $2bn in equity to pay for WestConnex, there was little insight into what the group may pay for the 51 per cent interest in Sydney Motorways, which owns WestConnex.

Much of it depends on what interest in the Sydney Motorways stake Transurban will emerge with and how much equity will be supplied by its partners.

Final bids were due last Monday but the trouble for the NSW government, and also for Transurban, is that the Australian Competition & Consumer Commission has extended the period of its review of the Transurban bid to September 6.

This meant that Transurban had to put forward a bid for an interest in the three-stage tolling project that is conditional on clearance from the competition watchdog.

As revealed by DataRoom last month, IFM has added Canadian pension fund OMERs to its consortium to take on Transurban in the final stages of the WestConnex contest, along with Dutch pension fund APG.

Representatives from state government’s advisers, Goldman Sachs, are said to have been going back and forth to the final two bidders to seek clarity on their proposals in what is said to be a highly complex sale process.

The government’s advisers have maintained that examining the bids for the complex project before announcing a winner would always take some time.

Some observers say the government is likely to take a bet on the ACCC findings being in favour of Transurban’s bid and awarding the asset to the toll road power house if its price turns out to be superior to that put forward by the IFM consortium.