DataRoom AM: China's railway play

Chinese firms look to be on the hunt for Australian rail assets, while foreign players interested in NSW and Queensland's 'poles and wires' seek local partners to bolster their bids.

Chinese firms in Australia are often drawn to mining and agriculture, but it appears rail-related assets are now in vogue as Downer EDI and UGL draw the spotlight.

Elsewhere, firms jostle ahead of the energy asset sell-off in NSW and Queensland, the IPO pipeline has investment bankers excited and Anchorage Capital is added to the list of possible United Dairy Power bidders.

ASX-listed services firms Downer EDI and UGL are on the radar of Chinese state-owned entities on the back of steep falls in their stock prices over the past few months. Chinese Southern Railway (CSR) is believed to have tested the waters on a possible deal for UGL’s rail division. The division has been valued as high as $450 million but that appears optimistic given UGL’s current market value is below $330m. Should a UGL deal fail to eventuate, Downer EDI is also in CSR’s sights.

It comes as China Communications Construction Co prepares to secure a $1 billion takeover of Leighton contractor John Holland this week, with the firm’s rail operations seen key to the deal.

In infrastructure, prospective bidders for state energy assets in NSW and Queensland are looking to shore up joint venture partners on deals this week, according to The Australian Financial Review. The heated chase for the ‘poles and wires’ assets is likely to see many offshore suitors link up with local infrastructure investors in order to improve their insights on the market and quell potential FIRB worries.

Among the most prominent early contenders is China’s State Grid, which has reportedly spoken with IFM Investors and QIC on the prospects for a JV.

In the IPO market, FleetPartners has called upon the services of Citi as the third joint lead manager on its planned $700m float. The fleet leasing company has already drafted UBS and Credit Suisse to work on the listing and hopes to hit ASX boards in the second quarter of next year. Investment banks, meanwhile, are waiting patiently to discover who has won mandates for the near $1bn floats of Wisetech Global and Genesis Care next year.

Another 2015 candidate pressing ahead is mobile payments provider Ingogo, which is chasing accounting and legal advisers on its planned first-half 2015 IPO after securing the services of UBS and Canaccord Genuity as lead advisors, the AFR reports.

Meanwhile, Champ Private Equity is seen likely to chase investor support for a cash injection of about $1bn next year. According to the AFR, the firm is preparing its fourth capital call, the first in five years, as it looks to go on the acquisition trail once more.

In dairy, Anchorage Capital has joined a growing field of suitors for United Dairy Power. The potential $100m sale has also drawn the attentions of dairy firms SaputoBegaMurray Goulburn and Parmalat.

Elsewhere, insurance broker Steadfast Group is tipped by the AFR to secure support from takeover target Calliden at a specially convened shareholder meeting today. About 93 per cent of proxy votes have come in favour of the $105m scheme.

Finally, Qube Holdings purchased NZ stevedoring firm ISO Limited on Friday for $NZ80m ($74.1m), while Bradken received a $872m non-binding takeover offer from Pacific Equity Partners and Bain Capital on the same day. The deal represents a healthy premium to Bradken’s battered down stock price prior to the receipt of the proposal, but is 15 per cent below a preliminary offer put forward by the same consortium in August.