* First foray for Transurban into Queensland assets
* Part of push by state governments to offload assets
* Transurban to raise A$2.74 bln, confirms FY14 distribution
(Adds industry comments)
By Swati Pandey
SYDNEY, April 24 A consortium led by Transurban
Group, Australia's biggest toll road owner, will pay
A$7.1 billion ($6.6 billion) to buy toll firm Queensland
Motorways Ltd, a move likely to pave the way for more such sales
by debt-laden states.
The sale by the Queensland state government is part of a
push by Australian states to sell large infrastructure assets to
pay for capital works programmes.
State governments, once hesitant to give up tax revenue by
selling infrastructure, have had a change of heart since the
state of New South Wales sold its desalination plant for $2.3
billion in 2012.
Infrastructure assets such as toll roads, power stations and
ports are in hot demand from pension funds and other investors
for their stable, long-run returns and tough barriers to
competition, particularly in highly regulated developed
countries such as Australia.
The winning bid, valued at over 27 times earnings, was
significantly higher than some analysts had anticipated.
"It's a pretty steep multiple that they paid," a source
close to the transaction told Reuters, requesting anonymity
because he was not authorised to speak to the media on the
In comparison, the 99-year lease on Port Botany in New South
Wales state went for 25 times earnings in a hotly contested
auction last year.
"The real transformation is for the Queensland government.
They would look at this deal and say 'let's get our other assets
up for sale' because they have a massive debt," the source
Australia's federal government said last month it would pay
states to sell assets as treasurers across jurisdictions agreed
to do more to lure local and overseas investors to take a slice
of an estimated A$100 billion in infrastructure.
Transurban said it would raise A$2.74 billion through a
fully underwritten accelerated renounceable entitlement offer
and a A$400 million placement to its bid partners.
Under the offer, investors can subscribe for 10 new shares
at A$6.75, a discount of 7.2 percent to Transurban's Tuesday
Melbourne-based Transurban led a consortium that included
superannuation fund conglomerate AustralianSuper and Abu Dhabi
Investment Co, beating two rival international bidders.
Transurban will own 62.5 percent stake in Queensland
Motorways, Australian Super will hold a quarter while Tawreed, a
unit of Abu Dhabi Investment Authority, will hold the remainder.
RBC Capital Markets analyst Paul Johnston said in a note to
clients that it was difficult to see how, given the sale price,
the deal would be accretive to free cash flow per share over the
next three years.
But Transurban said the valuation was in line with previous
Australian toll road transactions, citing the "quality, growth
profile and low-risk nature" of Queensland Motorways.
It also confirmed its distribution guidance of 35 cents per
security for FY14.
Three investment consortia - two involving Gulf Arab
government-owned funds - had lodged indicative bids for
The Australian Competition and Consumer Commission earlier
this month gave the green-light to the Transurban-led
($1 = 1.0766 Australian Dollars)
(Additional reporting by Colin Packham and Sonali Paul; Editing
by Edwina Gibbs and Stephen Coates)