Australian-led group pays $5.6 billion for NSW energy grid, foreigners in back seat

SYDNEY (Reuters) - The Australian state of New South Wales on Thursday said it has sold power grid Endeavour Energy to a consortium led by Macquarie Group Ltd MQG.AX for A$7.62 billion ($5.61 billion), relegating foreign bidders to a minority stake.

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The sale to a group led by Macquarie, Australia's biggest investment bank, and top pension fund manager AMP Ltd AMP.AX was politically sensitive due to opposition to foreign infrastructure purchases since NSW launched an energy privatization program in 2015.

The federal government in December signaled that any single foreign investor would not be allowed to own more than half of the 50.4 percent stake being sold in the state’s third-biggest energy grid.

But the restrictions do not appear to have cost the NSW government, with the Australia-dominated consortium paying a multiple of 1.6 times the grid’s regulated asset base (RAB) for its controlling stake.

That was in line with the sale of Transgrid for A$10.3 billion to mostly foreign interests, and more than the amount paid for Ausgrid, which sold for 1.4 times RAB after local pension funds bought it.

The Transgrid sale in 2015 met little political resistance, but the federal government subsequently blocked the sale of Ausgrid to State Grid Corp of China and Hong Kong's Cheung Kong Infrastructure 1038.HK citing national security concerns.

Macquarie has a 30 percent stake in the consortium, while AMP has 25 percent. Canada’s British Columbia Investment Management Corporation also has a quarter, and the Qatar Investment Authority owns a fifth.

The group would refinance all the company’s more than A$5 billion debt under the deal conditions, said two sources involved in the transaction.

The sale allows NSW, home to a third of Australia’s 24 million people, to cut debt and bankroll new infrastructure like motorways and rail lines through the middle of Sydney.

It raised net proceeds of A$2.9 billion, taking the total net proceeds of NSW asset sales to A$23 billion, beating a target of A$20 billion, state Premier Gladys Berejiklian told reporters.

“We’ve exceeded our personal goals. It allows us to accelerate a number of projects,” she said.

($1 = 1.3622 Australian dollars)

Reporting by Byron Kaye and Jamie Freed; Editing by Stephen Coates