DataRoom AM: NSW sparks fly

The NSW government’s plan to offload electricity networks has investment banks whirring, while Seven Group looks ready to pounce on the energy sector.

It’s all systems go on plans for a partial sale of poles and wires in New South Wales, leaving investment banks with a widening pipeline of opportunities.

Elsewhere, Seven Group prepares for a rapid energy expansion, Pacific Brands may again be in the sights of private equity and Apollo Global Management finds a way to cash in on its Nine Entertainment stake while remaining in an escrow period.

The NSW government has confirmed plans to offload 49 per cent of its electricity network assets on 99-year leases through deals that could reap as much as $20 billion. It’s the latest piece of good news for investment banks as the M&A and IPO pipelines continue to swell after a multi-year slump.

The NSW plans will include TransGridAusgrid and Endeavour Energy, but Essential Energy was left out of the mix after fierce opposition from the Nationals within the ruling Coalition. Among the likely suitors are Hong Kong’s Cheung Kong GroupQueensland Investment Corporation, Infrastructure Funds Management, Singapore Power and China’s State Grid Corporation along with North American pension funds, according to The Australian Financial Review.

The privatisation strategy will be taken to voters in March as the Baird government seeks a mandate. Given the brutal battle to get the poles and wires assets to market over the past 15 or so years however, there may yet be another twist in the tale.

Seven Group is readying for an assault on the energy sector regardless of whether it secures control of Nexus Energy tomorrow. Among possible interests for the Don Voelte-run group is a stake in InterOil or a deal to gain acreage off the coast of WA. Seven reportedly attempted to do the latter when a bidder for Karoon Gas’ Poseidon stake last week, but fell short at the hands of an $850m bid from Origin Energy.

As discussed in this column yesterday, Seven’s bid for Nexus is likely to get voted down tomorrow, but the firm will most likely claim its prize off receivers in coming months.

In retail, a profit warning from Pacific Brands has again ensured the market is talking about a private equity move for the clothing manufacturer. The AFR reports that KKR has run the numbers on a deal this year, but opted not to put forward an offer. However, yesterday’s 9 per cent drop in the group’s share price to a near one-year low could see at least one private equity player come knocking.

Apollo Global Management hasn’t let a voluntary escrow period halt its ability to cash in on the value of its hefty stake in Nine Entertainment, agreeing to a $300m margin loan with Nomura secured against its 22 per cent stake. According to the AFR, the deal is a strategy commonly used offshore but largely untested Down Under.

Meanwhile, it is believed that banks are clamouring around the media group to aid with the refinancing of its $850m debt pile. It’s a far cry from the days of 2011-12 when Nine was the focus of the world’s biggest distressed debt investors.

In the IPO market, Smartgroup will run a bookbuild for its planned $170m float this Thursday. The amount is shy of previous forecasts for $200m, indicating the owner of salary packaging group Smartsalary and fleet leasing firm Smartleasing wants to ensure a solid first day of trade.

Also keen to hit ASX boards this year, according to the AFR, are cinema software giant Vista Group and forex broker Pepperstone Financial. The former may reach a valuation of $200m, while Pepperstone could be appraised at as much as $700m.

The raisings come amid a busy period as Asaleo CareMonash IVF and Mantra Group prepare to hit boards before the end of the financial year. Also on the horizon are the multi-billion listings of Healthscope and Medibank Private.

Finally, Transpacific Industries has received regulatory approval to offload its New Zealand business for over $850m, with the deal to be finalised on June 30. 

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