Caisse de dépôt et placement du Québec will pay US$2.14-billion to join a consortium that owns Australia’s longest auto tunnel network.
Transurban Group will pay 11.1-billion Australian dollars (US$10.34-billion) for a near half-stake of the country’s longest auto tunnel network, giving it full ownership of the asset and dominance of Sydney’s toll road network.
Transurban already owned 51 per cent of WestConnex, a roughly 70-kilometre system of toll roads linking Sydney’s sprawling metro area, along with Canada Pension Plan Investment Board, Abu Dhabi Investment Authority and domestic pension fund AustralianSuper. The New South Wales state government owned the remaining share.
Buying out the 49-per-cent share from the state gives the group – of which Transurban owns a half-share – the full financial benefit as more sections of the giant capital works project open to traffic in the next few years.
The consortium added the Caisse as a member. The Caisse will pay 2.3-billion Australian dollars (US$1.6-billion) and own 10 per cent of WestConnex as a result.
The Caisse is a significant investor in Australia and New Zealand. CDPQ has been active in infrastructure, logistics, real estate and private equity, with recent investments including Healthscope, a private hospital operator, and Sydney Metro.
The Caisse is also a shareholder and long-term partner of Plenary Group, having invested in several Plenary-originated Australian public-private partnership projects since 2012. It also holds a 22.5-per-cent interest in TransGrid, the electricity-transmission network of the State of New South Wales and the Australian Capital Territory, and 26.7 per cent in Port of Brisbane.
Emmanuel Jaclot, the Caisse’s executive vice-president and head of infrastructure, said the WestConnex investment “aligns with our strategy targeting high-quality infrastructure alongside partners with extensive market knowledge and operational expertise.”
“WestConnex is one of the largest road infrastructure projects in the world [and] a key component of the New South Wales government’s integrated transport plan to ease congestion and connect communities in Sydney,” Transurban chief executive Scott Charlton said in a statement.
“We feel privileged to take Sydney Transport Partners’ holding in this critical asset to 100 per cent,” he added, using the name of the consortium.
Transurban said it would raise 4.22-billion Australian dollars (US$3.05-billion) in a stock issue to fund its part of the purchase, which already had the necessary regulatory approval. The company owns most Sydney toll roads and dominates Australia’s toll road market from coast to coast.
Australia has been experiencing a spike in mergers and acquisitions activity over the past year as lockdowns put downward pressure on asset valuations while rock-bottom interest rates make it cheaper for investors to raise capital.
Also on Monday, power grid owner AusNet Services Ltd said it would open its books to Canadian investment giant Brookfield Asset Management after it made an indicative offer worth 9.6-billion Australian dollars (US$6.9-billion).
With files from The Globe’s David Milstead
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