Another wealthy Asian group has made a plunge into the Australian energy market with the company behind the huge Chow Tai Fook Jewellery Group in Hong Kong and China is buying Alinta Energy, in a deal worth about $A4 billion ($US3.1 billion).
The Hong Kong-based conglomerate Chow Tai Fook Enterprises (CTFE) which is owned by the Cheng family, already has significant investments in real estate and integrated resorts in Australia but Alinta deal the group’s first foray into the energy sector.
It also controls infrastructure group NWS Holdings which is the is the infrastructure and service flagship of New World Development Company Limited.
It has diverse businesses and investments predominantly in Hong Kong and Mainland China, comprising toll roads, environmental management, port and logistics facilities, rail container terminals, commercial aircraft leasing, facilities management, healthcare services, construction and public transport..
Alinta said in a statement CTFE had indicated that the acquisition is highly strategic and it would invest to grow the business. “They are committed to ensuring the energy needs of Alinta’s customers continue to be met and intend to grow the business by pursuing value accretive investment opportunities in the Australian energy markets as they arise,” it said.
Private equity group TPG Capital is the largest shareholder in Alinta, owning almost 30 per cent of the company’s shares.
CTFE already has investments in Australian property including a joint venture with casino operator Star Entertainment group Ltd,
CFTE will reportedly fund the deal itself and had no plans to list Alinta or roll it into NWS, according to Reuters.
The transaction is subject to regulatory approval from the Foreign Investment Review Board and the new Critical infrastructure Office.
Last year the Federal Government rejected bids from China’s State Grid Corp and Hong Kong’s Cheung Kong Infrastructure Holdings for electricity grid Ausgrid on national interest grounds. Those reasons were never fully explained.
CKI’s subsequent $5.5 billion bid for DUET Group, which owns a power grid in Victoria, and other assets in WA, is still subject to review by the Foreign Investment Review Board (FIRB). A decision had been expected last month, but now may not come for a few more months.
CKI split the deal between three companies in the group Cheung Kong Infrastructure Holdings (CKI), Cheung Kong Property Holdings (CKP) and Power Assets Holdings and obtained approval from their shareholders on Tuesday.
The Critical Infrastructure office is not fully operational and it is not known if it will be playing a role in the Alinta and Duet deals.
Reuters pointed out that CTFE Chairman Henry Cheng is a member of the People’s Political Consultative Conference, China’s political advisory body.
But the Alinta deal is not expected to face regulatory problems for that reason.
Alinta is a retailer of energy, not a distributor like DUET, and it already has foreign ownership.
State-owned China Huadian Corp received regulatory approval to buy Alinta last year but it was unable to reach a deal with the company’s owners, one of the sources said.
Alinta generates 1,800 megawatts of power from a group of small gas-fired power stations in Australia on top of its retail business.
Together the two deals are valued at more than $A11 billion – which is a fair amount of money to risk on what a lot of recent commentary claims is a crisis.
