texas pacific group interest

Font Size: Decrease Increase Print Page: Print Blair Speedy | August 05, 2008
OVER the past five years, China has overtaken Japan and the US to become Australia's largest source of merchandise imports.

Little wonder then that the Chinese Government is backing the private equity fund leading the proposed $2.9 billion buyout of the Australian company that handles all those containers loaded with cheap clothing and electronics.

TPG, formerly known as Texas Pacific Group, is no stranger to the Australian market, having bought the Myer department store business from parent company Coles for $1.4 billion in 2006.

The US-based buyout firm was also part of the six-member private equity consortium whose bid to buy Coles last year was stymied by the meltdown in global credit markets, ultimately allowing Wesfarmers to claim the prize.

With $US50 billion ($53.6 billion) already under management, TPG won a major mandate in June when China's State Administration of Foreign Exchange agreed to invest $US2.5 billion with the private equity company.

But the money is not burning a hole in TPG's pocket.

In June, it also pulled out of a planned pound stg. 179 million ($378 million) rescue deal for troubled British lender Bradford & Bingley after the target company's debt rating was downgraded.

TPG also missed out on the $4.2 billion mobile services business of China's Huawei Technologies, after its indicative offer was last month judged to be too low to make the shortlist.

Asciano is not the only Australian asset to be on the receiving end of TPG's attentions, with the company believed to be involved with a proposal to buy out the property management rights of the collapsed Centro group.

Joining TPG in stalking Asciano is Global Infrastructure Partners, a joint venture between Credit Suisse and General Electric to invest in what it describes as "the rapidly evolving and under-funded market for infrastructure assets".

Over the past two years, GIP has bought London City Airport in Britain, Indian fuel storage group East India Petroleum, British waste management company Biffa and Texas power generator Channelview.

The joint venture also has a subsidiary that specialises in ports investment, buying the British port of Great Yarmouth last year and earlier this year picking up Argentine container terminal operator International Trade Logistics, in partnership with Singaporean stevedoring giant PSA International.

GIP is also cashed up, having closed a $US5.6 billion fundraising in May with the aim of investing in global infrastructure opportunities.

With Asciano shares trading at less than half the price at which they made their market debut in June last year, it is no surprise that the Australian company should appear on its radar.

That the target company has rejected their first proposal is unlikely to dampen the ardour of either bidder, with TPG having remained in the race for Coles for almost 12 months of increasingly unbelievable rejections before finally bowing out.