Plans for a float of $3 billion-plus Alinta Energy have swung into action, according to sources, with investment banks said to be pitching to its owner, TPG Capital, for an advisory role on the deal.
It comes as DataRoom can reveal that the reason why the main contender for the business, state-owned China Huadian, walked away from the private equity owned company was due to the submission of a highly conditional bid that required the approval of a newly appointed chairman, who was not keen on pursuing the transaction.
Compounding this was the federal election result, which would likely have made it more difficult for an offshore buyer to gain foreign investment approval from the government.
This has prompted adviser Lazard to relaunch the sale as a dual track process.
It is understood that banks will be awarded a mandate by the end of the week, the same time they find out if they have been successful for landing a joint lead manager role for the dual-track process of Arrium’s $1.5bn-plus grinding media business Moly-Cop.
Should Alinta hit the boards it would be the largest float of the year. The development surrounding the selection of joint lead managers indicates that AGL Energy’s hopes of buying the $1bn-odd West Australian assets within the business have been dashed, as the listed company declined to comment on Alinta when it reported its results yesterday.
Estimates have suggested that the WA operations represent about one third of Alinta’s overall value, and while sources indicated that AGL was an eager buyer, others say it made a relatively low ball offer for the business.
Among the line-up for the float is likely to be the investment banks that count TPG Capital’s Australian head Ben Gray as a close ally.
Macquarie’s investment banking head Robin Bishop, Goldman Sachs’ Christian Johnston and John Knox of Credit Suisse are old allies from Melbourne University’s Ormond College, and it’s common to see the financial powerhouses advising TPG Capital.
Already, Goldman, Macquarie and Credit Suisse are among the joint lead managers working on its divestment of poultry producer Inghams Enterprises — a deal that some analysts think will see TPG collect about $2bn in proceeds from the once family-owned business.
Also on the ticket are Morgan Stanley, Citi and UBS.
Sources believe it is likely the same group are pitching on Alinta this week.
It comes after two attempts by Lazard to sell the business to trade buyers — once in 2014 when the asking price was said to be as high as $5bn, and again this year with many around the market estimating that the business would likely sell for between $3bn and $4bn.
Some believe the relaunched attempts to sell the business came on the back of the lofty price secured for Pacific Hydro, with China’s State Power paying around $3bn last year, far exceeding the market’s expectations at the time.
Alinta was once owned by the failed investment bank Babcock & Brown and was the subject of a dramatic rescue attempt that involved TPG Capital securing control of the operation through a recapitalisation plan.
While it is impossible to know the exact amount of money TPG paid for the business, some have suggested it could have poured at least $1bn into Alinta.
