By Byron Kaye
SYDNEY (Reuters) – Australia’s top two pension funds have made a joint indicative offer to buy a majority stake in the country’s biggest electricity network, a month after bids from Chinese and Hong Kong interests were rejected on security grounds.
The unsolicited approach for a 50.4% stake in Ausgrid was made by IFM Investors, which invests on behalf of 29 domestic superannuation funds, and AustralianSuper, which says it holds the pensions of one in six working Australians.
Terms of the proposal were not disclosed. In the previous auction, the stake had been widely expected to top the Australian privatisation record of A$10.3 billion ($7.9 billion) that was paid for another energy grid.
A successful winning bid from local investors would likely help politicians tamp down a backlash over foreign asset ownership and the joint bidders emphasised that their proposal was “all-Australian”.
“If we are ultimately successful (we) intend to manage the asset in a responsible, considered manner over the long term,” AustralianSuper CEO Ian Silk and IFM Investors CEO Brett Himbury said in a statement.
The government of New South Wakes, which wants funds to invest in new roads and train lines, said it has formed a panel to assess the proposal and expects to give a decision by the end of the year. It still plans to repeat the formal bid process.
“This unsolicited proposal is another indication of the strong market interest for Ausgrid,” state treasurer Gladys Berejiklian said in a statement.
Last month, the state received final bids from government-owned State Grid Corp of China and Hong Kong-listed Cheung Kong Infrastructure Holdings Ltd but the federal treasurer intervened to block the sale, citing unspecified national security concerns.
That led to a rebuke from the Chinese government which called the move protectionist and warned that it “seriously impacts the willingness of Chinese companies to invest in Australia”.
The Federal government has said it will clarify its policy on foreign investment in Australian infrastructure.
The issue has been a hot button political topic since the 2015 sale of the Port of Darwin to Chinese interests sparked a backlash over security implications and even a rebuke from U.S. government officials.
IFM Investors had participated in first auction but pulled out early in the bidding process.
($1 = 1.3103 Australian dollars)
(Reporting by Byron Kaye; Additional reporting by Tom Westbrook; Editing by Edwina Gibbs)