Transurban Eyes WestConnex Stake
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Transurban and the NSW Government have started their two step that could see the country’s largest toll road company become the part-owner of the country’s largest Australia’s largest infrastructure development.
But with all deals of this kind there will be a bit of tooing and froing to be overcome before any deal emerges. It will be a multi-billion dollar announcement, if it happens.
Transurban’s AGM was told yesterday that the company is now evaluating the NSW’s government’s proposed sale of 51% of the company behind the massive WestConnex toll roads project which will run across much of central and western Sydney. The WestConnex toll road project, is planned to allow motorists to travel about 50 kilometres from Sydney’s west to the edge of the CBD without traffic lights (at a fair price though), is owned by Sydney Motorway Corporation (SMC).
“In Sydney, we are evaluating the registration of interest and expect to participate in the NSW government’s sell-down of a majority stake in the WestConnex project," Transurban CEO Scott Charlton told shareholders at the company's annual general meeting yesterday.
"We understand that there is significant interest from global and domestic parties in the sale process, with demand remaining strong for quality Australian infrastructure assets."
Transurban, which also owns or has interests in Sydney’s M2, M5 and M7, is looking at a joint bid for the majority stake in SMC, but has not revealed the other potential members of the consortium.
Given its dominance of Sydney’s toll road system, Transurban has to be a part of the buying group for control of the WestConnex system. It has the infrastructure in place for handling the tolls, their billing and other data. The NSW government called for registrations of interest in the SMC stake in September, a month after confirming it will pursue the sale to help fund the final stage of WestConnex.
The government will retain 49% of SMC and its assets.
WestConnex is expected to be completed in 2023, and in late 2015 was forecast to cost $16.8 billion - that has escalated by $1 billion or more according to media reports, which have also detailed problems the government is having in getting a major terminating point built in Rozelle, in Sydney’s inner west.
Transurban also had good news for the meeting about its revenue performance in the three months to September.
The meeting was told the company had collected $567 million in toll revenue in the three months to the end of September, up 10.5% on a year earlier, on a statutory basis.
Transurban’s preferred measure, proportional toll revenue, was even stronger, rising 11.4% to $589 million. Sydney proportional toll revenue rose 12.3% to $239 million.
The group’s average daily traffic increased by 1.1%, with growth recorded in Sydney, Brisbane and on its US roads offset by disruption in Melbourne from the $1.3 billion CityLink Tullamarine widening which is expected to open three months ahead of schedule later this month.
Transurban securities rose 0.9% to $12.17 yesterday.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.