Brookfield launches dual-track sales process for coal terminal

The Dalrymple Bay Coal Terminal in Queensland is likely to be valued at significantly more than A$2bn, with public market investors particularly interested in backing a regulated, defensive asset, sources say.

Brookfield Asset Management is undertaking a dual-track sales process for its Dalrymple Bay Coal Terminal in Queensland, exploring both a private market sale via auction and an initial public offering.

Infrastructure Investor understands that interested private buyers are receiving information memoranda on the asset in the run-up to Christmas, with indicative bids due in February 2020. Binding bids will then be expected later in the year.

Brookfield is also exploring the possibility of listing the asset through an IPO after receiving strong interest from public market investors during market soundings. A source indicated that public market investors were particularly interested in the potential opportunity to invest in a regulated, defensive asset that would provide stable yield.

Dalrymple Bay Coal Terminal is regulated by the Queensland Competition Authority and handles coal from more than 30 mines in the state’s Bowen Basin. It is one of the largest coal export terminals in the world, with capacity to export 85 million tonnes per year. It is operated under a 50-year lease from the Queensland government, with an option to extend for a further 49 years.

Market sources indicated to Infrastructure Investor that the asset, which has been marketed by Bank of America and HSBC, is likely to be valued at significantly more than A$2 billion ($1.4 billion; €1.2 billion).

The Queensland government leased the asset to Prime Infrastructure in 2001 for A$643 million.

Brookfield subsequently acquired a 44.9 percent stake in the terminal in 2009. This was part of a A$1.8 billion recapitalisation of Babcock & Brown International, to which Prime Infrastructure had changed its name. The recapitalised business then became known as Prime Infrastructure again.

Brookfield eventually acquired the rest of Prime Infrastructure in 2010 for A$971 million, taking control of the remaining 55.1 percent stake in Dalrymple Bay that it did not already own, as part of the deal.

The 2010 acquisition also gave Brookfield a 100 percent stake in Tas Gas, which it sold to Infrastructure Capital Group this year as part of the sale of Enwave Australia for A$420 million.

Brookfield Asset Management declined to comment.