Australian consortium buys power grid after Chinese bid blocked

Half of Australia's largest electricity network has been sold to two local firms for Aus$16.189 billion (US$12.35 billion), after Canberra blocked a Chinese bid citing national security. The Australian government has been concerned about investment from Beijing, and twice rejected the sale of the country's biggest private landowner cattle firm S. Kidman and Co to Chinese-led consortiums. The sale of 50.4 percent of Ausgrid, New South Wales state's electricity network, for a 99-year lease to the all-Australian consortium -- fund manager IFM and pension fund AustralianSuper -- means the transaction does not have to be approved by the Foreign Investment Review Board (FIRB). "This is an outstanding result and it is great to see a completely Australian consortium investing in this asset," NSW Treasurer Gladys Berejiklian said late Thursday. "The NSW government is delighted to be entering into a partnership with IFM and AustralianSuper given their demonstrated track record in the management and long-term investment in infrastructure assets." Canberra blocked the sale of Ausgrid to foreigners after rejecting a bid by China's State Grid Corp and Hong Kong's Cheung Kong Infrastructure Holdings in August. The state government did not put Ausgrid out to tender as had been done before, leading opposition politicians to question if it had obtained the best offer. Ausgrid is the second NSW power asset to be privatised by the state as it seeks to raise funds for investing in infrastructure projects. Electricity transmission network TransGrid was late last year sold to a Canadian, Middle Eastern and Australian consortium for Aus$10.258 billion. NSW Premier Mike Baird said despite the knock-back of the Chinese offer for Ausgrid, his government would still consider overseas bidders for Endeavour Energy, a state-owned electricity infrastructure firm, and the third power asset to be privatised. "The national security concerns that were identified were specific to this asset (Ausgrid)," Baird told the Australian Broadcasting Corporation. "Clearly we will engage with FIRB as Treasury launches the third process but our expectation is that of course, it will be open to foreign investment." There has been optimism that a joint Australian-Chinese bid for Kidman, announced earlier this month, could win a green light from Canberra after the government rejected two Chinese-led bids, citing the national interest.