AustralianSuper to sell Ausgrid stake in power shake-up
AustralianSuper, which runs the country’s biggest fund, will look to sell down part of its 25.2 per cent stake in Ausgrid.
AustralianSuper is looking to offload a 16 per cent stake in NSW electricity distribution company Ausgrid in a deal which could top $2bn, with the investment giant selling down five years after a blockbuster buyout from the NSW government.
The $220bn superannuation giant, which runs the country’s biggest fund, owns a 25.2 per cent share of Ausgrid. It will consider a partial sale leaving it with just over 10 per cent, through a direct stake and via IFM Investors where it is the biggest owner.
Investment bank upstart Barrenjoey Capital and Jefferies will advise AustralianSuper on the proposed transaction.
AustralianSuper, led by Ian Silk, and IFM each have a right of first offer over any sale by the other of their holdings in Ausgrid, while the NSW government’s 49.6 per cent interest in Ausgrid will remain unchanged, according to the statement.
“AustralianSuper has reiterated its view that Ausgrid presents an attractive opportunity for investors looking to partner in a long-term investment, with a high-quality management team which has delivered major improvements to the business since it was partially-privatised in 2016,” the Ausgrid statement said.
“Its future strategy means Ausgrid is well positioned to play a critical role in powering the Sydney CBD, Central Coast and Hunter Valley, particularly through the transition to the low carbon economy.”
The NSW government sold a half stake in Ausgrid to AustralianSuper and IFM, the largest manager of infrastructure assets, for $16bn in 2016 as part of a major privatisation scheme with the companies gaining a long-term 99-year lease as part of the deal.
Two months earlier, the federal government barred NSW from accepting an offer from China’s State Grid Corp, citing national security concerns along with a separate bid from Hong Kong-based Cheung Kong Infrastructure Holdings
AustralianSuper and IFM agreed to pay about 1.4 times Ausgrid’s regulated asset base value, according to Brett Himbury, the former chief executive officer of IFM whereas StateGrid offered a multiple of 1.7 times, sources said at the time.
The Auditor-General later found in 2018 the state government had not complied with rules and could have achieved better value for money had it opened the sale up to other bidders.
The report said the NSW government was unable to provide minutes of meetings relating to the sale, including a meeting between the Treasury secretary at the time, Rob Whitfield, and the bidders during which the secretary suggested a price that the bidder complied with later that day.
The former Baird NSW government reaped more than $30bn for controlling interests in the TransGrid transmission network and the Ausgrid and Endeavour distribution networks.
The most recent deal in the sector saw Kuwait’s Wren House — the fourth biggest sovereign wealth fund in the world — sell its 20 per cent TransGrid stake to Canadian pension giant OMERS after just five years as a major shareholder.
Networks have been seen as a source of predictable, steadily rising returns for superannuation investors although there has been rising tension over how much they can recover as a share of household and business electricity bills.
Transmission networks are also facing demands for new investment such as interconnectors between the four mainland states and Tasmania.
Separately, AusNet Services has identified a 190km “corridor” for its proposed western Victorian transmission network project that aims to deliver an extra 900 megawatts of wind and solar to the power grid.
The route would go from Bulgana to a new terminal station north of Ballarat, via the existing Waubra terminal station, and from the new terminal station north of Ballarat to Sydenham.
The Moorabool Central Highlands Power Alliance — an alliance of 10 community groups whose members live near the proposed powerline expansion — in January wrote to the Australian Energy Regulator over three alleged breaches of national electricity rules during AEMO’s regulatory test for the western Victorian transmission network project.
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