Gulf funds said to join consortium bid for Australia's Endeavour Energy

Sources say sovereign funds from Abu Dhabi and Kuwait are part of one of the groups in bidding process
Gulf funds said to join consortium bid for Australia's Endeavour Energy
By Reuters
Mon 13 Feb 2017 02:01 PM

Australian state-owned power grid Endeavour Energy has attracted indicative offers from at least three bidding groups comprised of local and foreign investors, according to sources involved in the process.

The offers for a majority stake in the utility, which is expected to fetch at least A$4 billion ($3.07 billion), are not binding and final prices will not be provided by bidders until due diligence is completed, four sources told Reuters.

The sources, who confirmed the involvement of three consortiums led by Macquarie Group, Queensland Investment Corp and Hastings Funds Management respectively, declined to be named for reasons of client confidentiality.

Endeavour is being sold by New South Wales state as part of a broader privatisation program to fund infrastructure development, at a time when foreign investment in assets like power grids and ports is facing increased scrutiny.

The federal government in December advised potential bidders that no single foreign investor could own more than half of the stake in Endeavour being sold, while a domestic investor must hold at least 20 percent.

The guidance was given after the government's surprise rejection in August of bids for a controlling stake in larger New South Wales power grid Ausgrid by China's State Grid Corp and Hong Kong's Cheung Kong Infrastructure Holdings (CKI) (1038.HK) on national security grounds.

Ausgrid was eventually bought for A$16.2 billion by domestic funds IFM Investors AustralianSuper in October.

The three confirmed bidders for Endeavour are consortiums comprised of local and foreign investors, the four sources said.

Macquarie Group has teamed with Canada's British Columbia Investment Management Corp, while Queensland Investment Corp, AMP and Canada's Borealis Infrastructure have formed another group.

The third group is comprised of the same consortium that paid A$10.3 billion for a controlling stake in electricity grid Transgrid in November 2015. It includes Hastings Funds Management, Spark Infrastructure Group, Canada's Caisse de depot et placement du Quebec and sovereign wealth funds from Abu Dhabi and Kuwait.

Macquarie and Queensland Investment Corp declined to comment, while Hastings representatives could not be reached for comment.

Two of the sources said they expected Endeavour would fetch at least 1.4 times its total regulated asset base of $A6.2 billion, based on other recent transactions in the sector. Only a 50.4 percent stake is for sale.

The federal government last month formed an agency to oversee "critical" infrastructure including power grids, which will assess risk and advice on transactions.

The government has yet to decide whether to approve CKI's (1038.HK) A$7.4 billion bid for DUET Group (DUE.AX).

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