Aus­tralia’s stance leaves for­eign in­vestors con­fused

The Sun (Malaysia) - - SUNBIZ -

SYD­NEY: Aus­tralia’s in­creas­ingly pro­tec­tion­ist stance is dis­suad­ing Chi­nese and other for­eign in­vestors from bid­ding in ma­jor as­set sales, po­lit­i­cal and cor­po­rate ad­vis­ers say, po­ten­tially re­duc­ing com­pe­ti­tion and hurt­ing prices.

The New South Wales state gov­ern­ment’s de­ci­sion last month to ac­cept a US$12.5 bil­lion (RM52.2 bil­lion) of­fer from lo­cal pension funds for ma­jor elec­tric­ity grid Aus­grid – af­ter the fed­eral gov­ern­ment pre­vi­ously ve­toed higher China and Hong Kong-based of­fers – has ir­ri­tated some in­vestors and their ad­vis­ers. It has left them con­fused by an ap­par­ent change in rules that means the high­est priced bid no longer wins.

The suc­cess­ful bid was ap­proved with­out a com­pet­i­tive process and in­vest­ment bankers in­volved in ne­go­ti­a­tions told Reuters it rep­re­sented up to US$2.3 bil­lion less than of­fers from Chi­nese-gov­ern­ment owned State Grid Corp of China and Hong Kong-listed Che­ung Kong In­fra­struc­ture Hold­ings Ltd that were both knocked back over “na­tional se­cu­rity is­sues”.

“Did we, as a coun­try, leave money on the ta­ble – prob­a­bly,” a mem­ber of Aus­tralia’s rul­ing coali­tion told Reuters.

“But the price was more than ac­cept­able and it can be ploughed back into the econ­omy, fast,” said the se­na­tor, who asked not to be iden­ti­fied.

The Aus­tralian gov­ern­ment is en­cour­ag­ing the states to sell as­sets by of­fer­ing them up to A$5 bil­lion in cash grants as in­cen­tives if they then quickly re-in­vest pro­ceeds in in­fra­struc­ture projects. Given that the pay­ments are on of­fer un­til 2019, this may trig­ger a wave of sales over the next three years.

En­deav­our is the next New South Wales state-owned en­ergy as­set slated for sale with a ma­jor­ity stake in the net­work that pow­ers parts of south­ern Syd­ney ex­pected to at­tract bids of around A$4 bil­lion. The Western Aus­tralian gov­ern­ment is also con­sid­er­ing the pos­si­ble sale of its elec­tric­ity net­work, pre­vi­ously val­ued at A$15 bil­lion by lob­by­ing group In­fra­struc­ture Part­ner­ships Aus­tralia.

A spokesman for the New South Wales gov­ern­ment de­clined to com­ment on whether the con­fu­sion over whether for­eign in­vestors were wel­come bid­ders was erod­ing fu­ture as­set val­ues. A spokesman for the Fed­eral Trea­surer also de­clined to com­ment.

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