HK- based Chow Tai Fook makes Australian energy play for Alinta

Hong Kong’s Chow Tai Fook Enterprises ( CTFE) on Thursday said it had agreed to purchase Australian gas and electricity retailer Alinta Energy in a deal two sources familiar with the matter said, which was valued at about A$ 4 billion ($ 3 billion).

It marks the first investment in the Australian energy sector for CTFE, a privately held conglomerate best known for retail arm Chow Tai Fook Jewellery Group.

It also controls infrastructure group NWS Holdings. The family- controlled business has already invested in the Australian property sector including a joint venture with casino operator Star Entertainment Group, and its foray into energy should offer steady returns, analysts said.

Alinta, owned by private equity companies including TPG Capital, had been pre- paring for an IPO.

Brokers had valued Alinta at an average of A$ 3.4 billion ($ 2.6 billion), making the Chow Tai Fook Enterprises offer attractive in comparison, one of the sources said.

The sources declined to be identified because they were not authorized to speak publicly about the deal. CTFE and Alinta declined to disclose the transaction price.

Australian energy and utility assets are attractive to foreign buyers because of strong growth opportunities, particularly power retailers as electricity prices have soared over the past five years.

“A lot of these parties have huge amounts of money they want to invest in a stable country where they can get good returns,” said Matthew Fitzgerald, a partner at law firm Herbert Smith Freehills specializing in mergers and acquisitions.