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NSW Treasury is ready to mull options for WestConnex.
NSW Treasury is seeking an investment bank or advisory firm to advise on sale options for the $16.8 billion WestConnex roads project.
Street Talk understands NSW Treasury has accelerated plans to consider WestConnex's future ownership in recent weeks, calling investment banks and advisory firms to pitch for a coveted scoping study mandate.
It's understood NSW Treasury would like to see the scoping study completed in coming months, so the government could consider its findings in time for the 2017-18 financial year budget.
The scoping study is expected to test potential buyer interest in all or part of the $16.8 billion WestConnex, and advise on the best sale structures for the government as it seeks to recoup its capital cost and even profit from the infrastructure build.
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Forecast growth in Sydney car trips.
Perhaps the biggest challenge will be finding an investor to take on ASX-listed giant Transurban Group, which owns the rest of the Sydney tollroad network in partnership with local and offshore infrastructure investors and pension funds.
Transurban's incumbent position would give it a strong position should all or part of WestConnex be put up for auction. The government has previously tried to court Spanish tollroad operators and investors from other parts of the world, and would be expected to do so again when its newest infrastructure baby comes up for sale.
While hiring advisers and commissioning a scoping study does not mean WestConnex is on the block yet, it is a strong signal. It is hard to think of a scoping study that has not resulted in a sale process in recent years.
It means WestConnex stands as one of the biggest deals in the 2017 mergers and acquisitions pipeline. Banks and/or advisory firms that miss out on the NSW Treasury scoping study mandate are expected to cosy up to Transurban, seeking a buy-side mandate.
Of course Macquarie Capital knows the asset well, having done a lot of work for Sydney Motorway Corporation - the private entity set up to oversee WestConnex - including meeting with potential investors. However, it is interesting that Macquarie's work has yet to result in a deal. [It's understood this latest mandate has nothing to do with Sydney Motorway Corp.]
It will also be interesting to see whether a buyer like Transurban would use the state's unsolicited proposal framework to seek to cut a deal. Transurban is familiar with the process, having used it in the past to propose road developments and similar matters
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