Colonial First State Global Asset Management (First State) has agreed to buy 100 percent of Vector Gas (Vector Gas) from New Zealand utility Vector for NZD952.5 million (€581 million; $624 million).
The transaction will be funded through Global Diversified Infrastructure Fund (GDIF) and the Colonial First State Active Infrastructure Income Fund (AIIF), two vehicles managed by the Sydney-based firm.
Drawing upon capital that was committed by five Canadian investors last June, the $716 million GDIF will contribute 84.5 percent of the equity required for the acquisition. The remaining 15.5 percent will be funded by AIIF.
Vector Gas owns and operates a gas transmission and distribution pipeline with a total length of 6,672 kilometres, supplying consumers throughout New Zealand's North Island.
“The investment will take the GDIF portfolio to over $1 billion, towards its initial target of $1.5 billion. The existing portfolio is resonating with experienced unlisted infrastructure investors and a further GDIF close is planned,” said Danny Latham, a partner at First State, in a statement.
GDIF has a geographical focus on OECD countries. It targets operating economic infrastructure, primarily in the utility and transportation sectors.
“New Zealand gas utility networks of this quality and scale, which benefit from stable regulatory regimes, are particularly attractive to long-term infrastructure investors,” said Gavin Kerr, a director at First State.
The deal, which remains pending regulatory and shareholder approval, is expected to close during the first quarter of 2016.
Vector and First State's funds said they are also considering opportunities to co-invest in regulated and unregulated energy infrastructure, both in New Zealand and offshore. They are also looking at possibilities to jointly operate gas distribution activities.
First State and its offshore entities, known as First State Investments, collectively managed $138 billion on behalf of investors as at 30 September. The firm has a total of $5.1 billion of unlisted infrastructure under management, the majority of which is based in Europe.