State Grid Corporation of China’s Jemena is believed to have hired investment bank UBS to advise on a potential offer for Origin Energy’s up-for-sale Darling Downs Gas Pipelines.
One of State Grid’s biggest assets in Australia is its 60 per cent stake in the unlisted assets of electricity and gas infrastructure owner Jemena, which it acquired in 2013 alongside a 19.99 per cent stake in SP Ausnet.
Origin is set to launch an auction for the three high pressure gas pipelines in coming months, in the next leg of an $800 million infrastructure sales program that has already seen assets sold to AusNet, SEA Gas and DEUT Group.
According to the Financial Review, sources State Grid is keen to take a close look at the Darling Downs pipes, which service some of Australia Pacific LNG’s upstream gas fields in the Surat Basin and Origin’s Darling Downs power station. The pipelines will be backed by agreements with APLNG and Origin and expected to be worth about $400 million.
State Grid’s interest comes as the China state-owned utility steps up its Australian acquisition plans. It is one of two bidders vying for a majority stake in New South Wales’ largest electricity distributor, Ausgrid, and already owns stakes in South Australian transmission company ElectraNet, Jemena and ASX-listed AusNet.
Bids for Ausgrid are due later this month. Interestingly, UBS is running the auction as sell-side adviser to NSW along with Deutsche Bank.
State Grid has also been busy offshore. It signed a US$1.8 billion deal to buy a controlling stake in Brazil’s largst power distributor, CPFL Energia, last week.
The Jemena portfolio, which includes a chunk of Victoria’s power and NSW’s gas grids, was valued at $9 billion at the time of purchase, signalling the deal was worth more than $5 billion in total, including debt.