Australian state-owned power grid Endeavour Energy has attracted final bids from two consortiums comprised of local and foreign investors, and a decision on the expected A$4 billion (US$2.99 billion) deal could come within a week, sources said.
The offers from consortiums led by Macquarie Group and Hastings Funds Management for a majority stake in the utility are binding and follow weeks of due diligence, according to two sources involved in the process.
Endeavour is being sold by New South Wales state as part of a broader privatization program to fund infrastructure development, at a time when foreign investment in sensitive assets like power grids and ports is facing increased scrutiny on national security grounds.
The Australian 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.
A decision on the winning bidder is likely to be made within a week, after the consortiums pitch their respective business plans, a third source said.
Three groups had put in non-binding bids for Endeavour in February, but one of them, led by Queensland Investment Corp, later pulled out, the sources said.
Macquarie has teamed with Canada’s British Columbia Investment Management Cop, Australia’s AMP Capital and Qatar Investment Authority.
The other 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, Spark Infrastructure Group, Canada’s Caisse de dépôt et placement du Québec and sovereign wealth funds from Abu Dhabi and Kuwait.
Endeavour is expected to fetch 1.4-1.5 times its total regulated asset base of $A6.2 billion, based on other recent transactions in the sector, RBC Capital Markets analysts said on April 19. Only a 50.4 percent stake is for sale.
Hastings and Macquarie declined to comment while QIC did not respond to a request for comment.
(Reporting by Jamie Freed; Editing by Stephen Coates)
Photo courtesy of Endeavour Energy