Canadian pension OMERS has acquired a 19.99 percent stake in New South Wales electricity transmission company TransGrid for an undisclosed sum.
The C$109 billion ($80.2 billion; €70.1 billion) pension bought the stake from Kuwait Investment Authority’s Wren House Investment Management, accounting for the latter’s entire stake in the business.
The other shareholders in TransGrid are fellow Canadian pension Caisse de dépôt et placement du Québec (24.99 percent stake), the Morrison & Co-managed Utilities Trust of Australia (20.02 percent), Australian Securities Exchange-listed Spark Infrastructure (15.01 percent) and Tawreed Investments, a subsidiary of the Abu Dhabi Investment Authority (19.99 percent).
The stake acquired by OMERS was first offered to the other shareholders in TransGrid in February as part of the pre-emptive rights process contained within the shareholders’ agreement.
ASX-listed Spark Infrastructure is the only shareholder to comment publicly on the process, telling shareholders in a statement today that the value of its stake has grown since it was acquired in 2015.
“Spark Infrastructure declined to participate [in the pre-emptive bid process] and notes that its 15.01 per cent equity investment in TransGrid was purchased for A$734.3 million [$513.5 million; €447.9 million] in December 2015,” the firm said.
“Accordingly, the implied equity value on a proportional basis represents an approximate compound annual increase of 4.0 per cent per annum in addition to an approximate average distribution yield of 4.6 per cent per annum, reflecting the improved business performance, growth in regulated and contracted assets, as well as the significant and attractive growth pipeline.”
TransGrid, a regulated business operating a high-voltage electricity transmission network that connects around 8 million people in New South Wales and the Australian Capital Territory, was privatised by the NSW government as part of its asset recycling programme.
The deal saw the consortium pay A$10.3 billion for a 99-year lease to operate the asset. Wren House’s stake is the first time any stake in the business has been sold since that deal was done.
Spark Infrastructure managing director and chief executive Rick Francis said in a statement that he looked forward to working with OMERS.
“The transaction recognises the high quality of the existing business and the value creation opportunity we see in TransGrid, in particular the extensive pipeline of growth projects emerging from the Integrated System Plan, the recently-announced Renewable Energy Zones in NSW and the continued growth of TransGrid’s unregulated contracted connections business,” he said.
“Spark Infrastructure has long appreciated the ongoing benefits of TransGrid’s connections business. These growing contracted assets will continue to be fuelled by the growth in renewables. We look forward to this value being further realised.”
Christopher Curtain, OMERS Infrastructure managing director – Australia, said: “Today is a proud day for OMERS, as TransGrid marks our second infrastructure investment in Australia, after the Port of Melbourne.
“This announcement also represents an increasing role for OMERS in the growth and development of New South Wales, which includes the substantial investment being undertaken by OMERS-owned Oxford Properties in the Sydney Metro Pitt Street over-station development.”