A global asset management company, Brookfield, bid for an Australian freight logistics company, Asciano, to spark more deals with global investors
According to The Australian Financial Review today, two of Australia's most powerful infrastructure players say Brookfield's $9 billion tilt for Asciano may unleash a flood of overseas interest in local utility and electricity assets as global investors clamour for reliable earnings in a low-yield economy.
Port of Melbourne Corporation chairman Mark Birrell and NSW Ports chairman Paul McClintock said the Canadian giant's proposed bid for ports and rail operator Asciano could lead to a surge in interest in other assets being put up for sale by state governments.
"I'm very pleased that there is heightened investment interest in the nation's infrastructure assets because we need extra funds attracted to it to help fund new projects," said Mr Birrell, who is also chairman of Infrastructure Australia. "Australia can't simply rely on increased public funds – it has to attract new sources of capital – and overseas funds are increasingly going to drive this interest. They like the long-term returns."
Brookfield, Canada's largest alternative asset manager, lobbed a non-binding cash-and-shares offer last week valuing Asciano at $9.05 a share, a 36 per cent premium to the $6.65 the company's stock closed at on Tuesday. Asciano shares climbed by about 20 per cent in the following three trading days before falling 14¢ or 1.75 per cent to close at $7.86 on Monday.
"In a lower interest rate world, there will increasingly be more and more investors looking at long-duration assets," said Mr McClintock, who is also the chairman of the Committee for the Economic Development of Australia (Ceda). "It's an international space so you will see lots of foreign interest coming through as assets around the country are put up for sale."
A string of major government-owned Australian infrastructure facilities are being primed for sale by the end of this year as state governments seek to raise cash to build new roads and highways.
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