CKI’s $5.6bn Duet takeover passes foreign investment test

Australia’s foreign investment watchdog and shareholders of Duet Group have approved the proposal by Hong Kong tycoon Li Ka-shing to acquire a portfolio of energy assets.

A consortium led by Cheung Kong Infrastructure is one step closer to take over Duet Group in a deal set to become the Hong Kong-based investor’s largest investment Down Under. 

Australian Federal Treasurer Scott Morrison has no objection under the Foreign Acquisition and Takeovers Act to the proposal, which values the Australian energy asset manager at A$7.4 billion ($5.6 billion; €5.2 billion). Duet’s shareholders have also approved the bid, with 99.67 percent voting in favour during a general meeting today.   

“The Duet boards believe that the consortium’s proposal fully recognises the value of Duet’s operating businesses and the platform for future growth that our management team has created,” said Doug Halley, chairman of Duet’s corporate arm.   

Duet will seek approval and advice from the Supreme Court of New South Wales, with an expected close on 15 May.

Once complete, the deal will see the consortium’s members, which include three Hong Kong-listed companies controlled by tycoon Li Ka-shing, boost their exposure to Australia. CKI and Cheung Kong Property each own a 40 percent stake in the group, dubbed CK William Australia Bidco, with the remaining 20 percent stake held by Power Assets Holding. 

CKI and Power Assets already have several Australian energy infrastructure assets in their portfolio, including SA Power Networks, Powercor Australia, CitiPower, Australian Gas Networks and Australian Energy Operations. 

Duet owns and operates energy utility assets in Australia, the US, the UK and Europe. Its major holdings include Multinet Gas, a gas distribution business in Victoria; United Energy, an electricity distribution business, also in Victoria; as well as Dampier Bunbury Pipeline, a gas pipeline in Western Australia. It also manages an international portfolio of over 900MW of clean energy generation assets. 

CKI’s unsolicited bid for Duet was placed last December, after it failed to buy a majority stake in Ausgrid in August 2016. The Australian government had blocked the latter bid, as well as a rival offer from China’s State Grid, citing national security concerns.