AustralianSuper, IFM Investors make $10bn-plus bid for Ausgrid

Two of the nation’s biggest superannuation funds have made a $10 billion-plus offer for government-owned Ausgrid.

Early last month, Treasurer Scott Morrison blocked the sale of Ausgrid to Chinese and Hong Kong buyers on national ­security grounds.

Two of the nation’s biggest superannuation funds have made a ­surprise $10 billion-plus offer for the NSW government-owned Ausgrid business, putting the electricity network back in play after Chinese buyers were blocked last month from buying it.

The unsolicited move by the $100bn AustralianSuper, one of the country’s biggest super funds, and super fund-owned IFM Invest­ors represents a more politic­ally palatable deal for the NSW and federal governments.

Early last month, Scott Morrison blocked the sale of Ausgrid to Chinese and Hong Kong buyers on national ­security grounds.

The Chinese government-owned State Grid Corp had ­offered more than $12bn and Hong Kong-listed Cheung Kong Infrastructure group was offering up to $16bn for the 99-year lease.

The new offer, which is understood to be worth more than $10bn, was described yesterday as financially compelling and one that would not require approval from the Foreign Investment ­Review Board.

NSW Premier Mike Baird said his government was now consid­ering the AustralianSuper-IFM bid. A final decision is expected to be made later this year. “The government can ­receive unsolicited proposals at any time and has a thorough process in place to assess such proposals,” Mr Baird said.

While falling short of the Chin­ese offers, a sale would still represent a political boon for the Baird government, which is using asset sales to fund rail and road projects, as well as hospitals and schools.

If successful at the due dilig­ence stage, the bid by AustralianSuper and IFM would act as a circuit-breaker for a relaunching of the Ausgrid auction process, slated for later this year.

After the federal Treasurer blocked the CKI and State Grid bids last month on security grounds, ­Future Fund chairman and former treasurer Peter Costello told The Weekend Australian yesterday that the decision demon­strated the need for clarity on foreign investment rules.

“Every government is entitled to protect their national security. The only thing I’d say is, where you have a foreign investor coming in, either with domestic players or not, it’s bringing in capital that otherwise wouldn’t be in this country to build new infrastructure,” Mr Costello said.

NSW Treasurer Gladys Berejiklian said the government would give the proposal full consideration, but preparations to ­relaunch the Ausgrid transaction were continuing. It would be ­unusual for a government to sell an asset without an auction.

Any other bidder or consort­ium is able to come forward and offer a counter bid, but it must be financially compelling to pass the first of three stages in the assessment process. The Baird government has been advised that if the federal government cannot block the sale on FIRB grounds, it is ­unlikely to have any other legal ­recourse to prevent a sale.

IFM and AustralianSuper said in a short joint statement that the “all-Australian proposal” was “unique and represents excellent value for the NSW government”.

“AustralianSuper and IFM Invest­ors are pleased to jointly submit this unique proposal and, if we are ultimately successful, intend to manage the asset in a ­responsible, considered manner over the long term,” said Ian Silk, the chief executive of AustralianSuper, and Brett Himbury, the chief executive of IFM Investors.

Details of the proposal would remain confidential, the funds said. IFM Investors is owned by 29 Australian superannuation funds and manages more than $72bn worth of assets. AustralianSuper manages more than $100bn on ­behalf of its two million members.

NSW Labor Treasury spokesman Ryan Park said the “whole process has been completely ­botched” by the government.