By Gillian Tan
Hastings Funds Management and Ontario Teachers’ Pension Plan have won the right to a long-term lease of Sydney’s desalination plant after submitting a bid worth 2.3 billion Australian dollars (US$2.32 billion), three people familiar with the matter said Deal Journal Australia.
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- A glass of treated drinking water produced at the Kurnell desalination plant is arranged for a photograph in Sydney, Australia
The pair beat off separate bids by Australia-listed Spark Infrastructure and Industry Funds Management, the people said.
The New South Wales Government — advised by Goldman Sachs — intends to use the proceeds from the desalination plant long-term lease sale to retire debt and invest in other infrastructure projects.
At least four consortiums made the shortlist, but the UBS-advised team comprising of Spanish infrastructure group Acciona and Mitsubishi subsidiary Trility, withdrew from the process in March.
The desalination plant can supply up to 250 million liters a day and is currently operated by Veolia Water Australia.
It exists so Sydney residents aren’t solely dependent on rainfall for secure water supply. Australia is currently drought-free for the first time in a decade.
Morgan Stanley and RBC Capital Markets, acted as financial advisers to Hastings and Ontario Teachers’ Pension Plan.
A consortium of 11 banks including HSBC and RBC were involved in the debt financing of the deal. Australia’s “Big Four” banks –Westpac, National Australia Bank, ANZ Banking Group and Commonwealth Bank of Australia — were also part of the Gilbert + Tobin-advised consortium.
Part of the appeal for funds acquiring the lease for the desalination plant is its steady cash flows from an AAA-rated counterparty as the NSW government owns the offtake.
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