* State Grid buys 19.9 percent of SP Ausnet for A$824 mln
* Buys 60 percent of energy co SPI (Australia) Assets
* Deal signals Singapore retreat from Australia
* Transaction could be worth over A$5 bln including debt
(Recasts, adds State Grid and analyst comment)
By Kevin Lim and Maggie Lu Yueyang
SINGAPORE/SYDNEY, May 17 (Reuters) – State Grid Corp of
China (SGCC), the world’s largest state utility, has
agreed to buy large stakes in Australian power companies from a
unit of Singapore’s Temasek in a deal that could be
worth over A$5 billion ($4.93 billion), as it searches overseas
for higher-yielding assets.
State Grid will buy 19.9 percent of electricity supplier SP
Ausnet for A$824 million, and 60 percent of energy
infrastructure company SPI (Australia) Assets Pty Ltd (SPIAA)
for an undisclosed amount, Singapore Power, an arm of
Singaporean state investor Temasek Holdings (Private) Ltd, said
on Friday.
Singaporean government-linked firms have spent billions of
dollars over the past decade on Australian telecoms, energy and
real estate assets.
The retreat from Australia may signal a shift in their
investment strategy away from relatively staid markets in favour
of higher-growth economies, leaving room for the acquisitive
State Grid.
“The proposed investments by State Grid are two of the most
significant power asset deals in Australia. They reflect the
strength of the Australian power sector, and in particular the
attractiveness to investors of a transparent and stable
regulatory regime,” said Anna Collyer of law firm Allens, which
along with Linklaters advised State Grid on the deal.
SP AusNet, listed in Australia and Singapore, held assets
worth A$10 billion as at end-March 2013. SPIAA, which uses the
trading name Jemena and owns electricity and gas distribution
networks, has assets of around A$8.9 billion, according to
Allens and Linklaters.
Combined, the two deals are worth more than A$5 billion,
including debt, according to Reuters calculations.
China’s cash-rich power groups have been scooping up
overseas assets in recent years to offset their low-yielding
domestic operations. State Grid, ranked seventh on the Fortune
Global 500 list in 2012 with revenue of approximately US$300
billion, has already established a presence in Australia, the
Philippines, Brazil and Portugal.
State Grid is also interested in acquiring a stake in New
Zealand’s second-biggest electricity and gas distributor Powerco
Ltd, according to a source with knowledge of the
matter.
“The return on investment and the regulatory system of the
local market are the key factors SGCC considers when evaluating
overseas investment opportunities,” Cheng Mengrong, co-chair of
the International Cooperation Department of SGCC, said in a
statement.
SINGAPORE SHIFT
In other signs of Singapore’s withdrawal from Australia,
Singapore Telecommunications Ltd is mulling the
potential sale of its Optus Satellite business in a deal that
could be worth at least A$2 billion. CapitaLand Ltd,
meanwhile, is undertaking a strategic review of its A$1 billion
stake in Australand Property Group as it wants to focus
on China and Singapore.
All three Singaporean firms are part of the Temasek stable
but generally operate independently of the state investor.
Gabriel Yap, executive chairman of investment firm GCP
Global, said Singaporean firms are focusing more on
faster-growth markets.
“Australian assets are essentially steady growers that help
balance out portfolios,” he added.
Credit Suisse Group AG and Lazard Ltd
advised Singapore Power while Goldman Sachs Group Inc and
Macquarie Group Ltd advised the Chinese group.
SP AusNet, listed in Australia and Singapore, owns and
operates electricity and gas distribution assets in Australia’s
southeastern Victoria state, including the state-wide
electricity transmission network.
Singapore Power said it would continue to hold a 31.1
percent stake in SP AusNet, which would remain publicly listed.
An SP Ausnet representative declined to comment beyond what was
said in the company’s press release.
SP AusNet’s Australia-listed shares climbed almost 2 percent
to A$1.30 on Friday, having gained more than 17 percent this
year.
Both transactions announced on Friday are subject to
approvals from Australia’s Foreign Investment Review Board
(FIRB), the Australian Competition and Consumer Commission, and
China’s National Development and Reform Commission.
The FIRB examines all investment from state enterprises to
make sure they are genuine commercial deals and are in line with
Australia’s national interests. An approval in this case would
likely as the assets were already foreign-held.
State Grid late last year bought a 41 percent stake in the
unlisted South Australian electricity supplier ElectraNet from
the Queensland state government’s Powerlink.
($1 = 1.0146 Australian dollars)
($1 = 1.2510 Singapore dollars)
(Additonal reporting by Saeed Azhar and Denny Thomas; Editing
by Stephen Coates and Daniel Magnowski)
UPDATE 3-China ups stakes in Australia power firms as Singapore retreats
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