KEY POINTS:
The Australian infrastructure investor which has bought half of New Zealand energy distributor Powerco says its presence here allows it to investigate other opportunities.
QIC Infrastructure has bought 50 per cent of Powerco from Babcock & Brown Infrastructure Group, which will net the debt-loaded investment fund $400 million.
The sale values Powerco at $2.05 billion, says Sydney-based Babcock Infrastructure. It will retain Powerco's gas distribution unit in Tasmania, valued at $200 million.
It is understood Cheung Kong Infrastructure Holdings, buyer of Vector's Wellington lines business, was interested, as was Vector itself, at an early stage in the process.
Queensland-based QIC has more than A$80 billion ($90.5 billion) under management, and its head of global infrastructure, Ross Israel, said it was the fund's first foray into New Zealand.
It has stakes in transport, utilities, telecommunications and public-private partnerships in Britain, Spain, Latin America, India and Australia.
"Having the investment in Powerco will enable us to have a regular line of sight to what else is going on with other opportunities in New Zealand," said Israel.
Like Australia, New Zealand needed heavy investment in roads, energy and water infrastructure.
"In the current market, being close to home is a key attraction. The investments on the other side of the world create different challenges in terms of managing them."
BBI, whose shares have slumped 81 per cent in the past six months, said in August it might sell as much as half of three of its main businesses, Powerco, WestNet Rail and BBI Euroports, to cut borrowing and provide funds for investment.
The $2.25 billion valuation for the whole of Powerco, including debt, is 25 per cent higher than the $1.8 billion price BBI paid in 2004. Net proceeds from the sale, due to be completed in the first quarter of 2009, were expected to be about $400 million, BBI said.
Powerco's management was left largely intact after the sale to BBI four years ago, and that is expected to remain the case following the sale - which still requires regulatory approval, including from the Overseas Investment Office.
Babcock Infrastructure yesterday gained A4c to A25.5c on the ASX.
WHO THEY ARE THE BUYER
QIC Infrastructure
A part of QIC that was established in 1991 and is an institutional investment manager in Australia, with more than A$80 billion in funds under management and more than 80 institutional clients, including superannuation funds, government and statutory authorities, insurance organisations, charitable bodies, financial services companies and educational institutions.
THE SELLER
Babcock & Brown Infrastructure (BBI)
It bought 100 per cent of Powerco in August 2004 and is part of Babcock & Brown, a debt-loaded Australian investment bank whose share price has plunged this year.
THE TARGET
Powerco
NZ's second-largest energy distributor. Distributes electricity to 312,000 homes and businesses in Coromandel, western Bay of Plenty, Hauraki Plains, northeast Waikato, south Waikato, Taranaki, Wanganui, Rangitikei, Manawatu and Wairarapa regions. The company distributes gas in the lower North Island.