Ann: FY2019 Fact Book - Supplement, page-2

Plucky Wren taps bankers to feather its nest at TransGrid

Interested parties in hot pursuit
Since the news broke, Australian superannuation funds and other utilities sector investors – and their retinue of bankers and other advisers – have been chasing Wren House and potentially interested parties.Early indications are that Wren House has put a big number on the table, and it would take a big commitment from any of the existing shareholders to double down on their investment and scoop up the stake.

The shareholders include ASX-listed Spark Infrastructure, which copped a fair amount of investor backlash when it acquired 15 per cent of TransGrid as part of the privatisation in 2015. Spark paid what was universally recognised as a big price – and ended up with a minority and non-controlling position.Spark’s pitch to its own investors has been to look at TransGrid’s growth profile, with its regulated asset base potentially doubling in the next decade while most networks grow at a more steady 2 to 3 per cent a year.
A Spark spokesman declined to comment.Perhaps the most likely buyer from the shareholder group is Canada’s CDPQ, which is already the biggest investor with a 25 per cent stake. CDPQ isn’t afraid of writing big cheques, but even it is likely to be hesitant about piling another $2 billion or so into something it already has plenty of exposure to. Could it split the stake with Spark or Morrison & Co-managed UTA? It’s not out of the question.But in the meantime, the odds are shortening that Wren House will have its bankers take the stake to market and auction it off to the highest bidder. If that’s the case, it could take another six or so months to secure a deal.This column first flagged the potential sale last year, as investors mulled the network’s performance and tax changes since the initial acquisition.

TransGrid is the largest high-voltage electricity transmission network in Australia’s National Electricity Market by electricity transmitted and helps supply power to more than 3 million homes and 600,000 businesses.