OMERS has acquired a 19.9% stake in Australian energy company Transgrid from Wren House, a subsidiary of the Kuwait Investment Authority.
Christopher Curtain, managing director for Australia at OMERS Infrastructure, said it was the Canadian pension fund’s second commitment in Australia, after its investment in the Port of Melbourne.
“This announcement also represents an increasing role for OMERS in the growth and development of New South Wales (NSW), including the substantial investment being undertaken by OMERS-owned Oxford Properties in the Sydney Metro Pitt Street over-station development,” Curtain said.
TransGrid’s high voltage transmission network connected around 8m people in NSW and the Australian Capital Territory to electricity supply, and the business offers investors like OMERS regulated revenue that matched its pension obligations, Curtain said.
Ralph Berg, global head of infrastructure at OMERS, said: “TransGrid is poised to continue making a crucial contribution to Australia’s electricity needs while also playing a key role in helping reduce carbon emissions from the country’s electricity grid.”
OMERS Infrastructure acquired the stake from Wren House after Spark Infrastructure and other consortium members declined to take up their pre-emptive rights.
Wren House was part of the consortium, including Utilities Trust of Australia, CDPQ and Tawreed Investments (owned by Abu Dhabi Investment Authority), founded in 2015 to acquire the asset from the NSW government for A$10.3bn.
Spark Infrastructure managing director and CEO, Rick Francis said today: “When considering this transaction, we see an even more significant difference between the valuation and how the listed market is currently valuing Spark Infrastructure’s ownership in TransGrid.”
Spark Infrastructure holds a 15.01% equity investment in TransGrid, purchased for A$734.3m in December 2015.
“If read across, this would result in a significant uplift in value for Spark Infrastructure’s 15.01% equity investment in TransGrid, which we believe can be attributed to the large growth opportunity coming from the proposed integrated system plan build-out and further transmission connection opportunities,” Francis said.
As the backbone of the country’s national electricity market, TransGrid is playing an essential role in the transition in Australia to a low-carbon renewables future.
Francis said Australia was entering a “once-in-a-generation” growth story, as demonstrated by the pipeline of more than A$10bn in projects identified by state and federal governments and the Australian energy market operator.