(Corrects foreign investment rules from source in grafs 1 and
5, adds name of NSW Treasurer in graf 10)
* Endeavour stake expected to raise A$4 bln
* Foreign bidders restricted to owning 50 percent of the
* Australian govt to keep bidding conditions confidential
By Jamie Freed and Tom Westbrook
SYDNEY, Dec 2 An Australian state government
kicked off the A$4 billion ($2.96 billion) sale of a major stake
in electricity network Endeavour Energy on Friday, with one
source saying no single foreign investor will be able to own
more than half of that stake.
The sale is the last of three power grid sales by New South
Wales state, following the A$16.2 billion sale of Ausgrid in
October to a consortium of Australian pension funds and the sale
of TransGrid to an international consortium of funds for A$10.26
billion in November 2015.
The Ausgrid deal was agreed at a price lower than bids made
by Chinese and Hong Kong suitors after Australia's treasurer
Scott Morrison blocked the foreign bids, citing national
security concerns, a move that frustrated the bidders and
spooked foreign investors.
One source familiar with the Endeavour process told Reuters
that prospective bidders have been advised that no single
foreign investor can own more than 50 percent of the stake.
A domestic investor must hold at least 20 percent of
Endeavour, the source added, declining to be named because the
talks were confidential.
Julian Leembruggen, a spokesman for Australian treasurer
Scott Morrison, said foreign ownership guidelines for the
transaction would be provided to bidders and not announced
The 50.4 percent stake in Endeavour, which powers parts of
southern Sydney, is expected to attract bids of around A$4
billion ($3 billion).
The New South Wales government was waiting for guidance from
the federal government on the treatment of foreign bidders
before launching an auction process led by advisers UBS and
On Wednesday, Western Australia state announced that its
power grid, Western Power, would be sold by public float to
mostly Australian investors in order to address any national
security concerns about foreign ownership.
Bidding for Endeavour Energy will be open until Jan. 16,
2017, New South Wales Treasurer Gladys Berejiklian said, adding
that proceeds will be spent on infrastructure.
Endeavour reported earnings before interest, tax,
depreciation and amortisation of A$687 million in the financial
year ended June 30, according to its annual report.
Endeavour had an estimated regulatory asset value of more
than A$6 billion and an information memorandum and data room for
potential bidders was prepared during the year, the report said.
($1 = 1.3493 Australian dollars)
(Reporting by Jamie Freed and Tom Westbrook. Writing by Jane
Wardell; Editing by Tom Heneghan)