andrew cannane, trust company - examining the appetite for public assets from private investors

INFORMA:

ASSET PRIVATISATION BRIEFING DAY

The Trust Company

Andrew Cannane

General Manager, Corporate Clients

Thursday, 5 December 2013

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INTRODUCTION

1. Examining the appetite for public assets from private investors

a) Where is the demand coming from?

b) Ensuring asset sales are designed to appeal to the private sector

c) What are investors looking for and what constitutes a compelling

investment opportunity?

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DEMAND FOR PUBLIC ASSET SALES

1. Government office portfolio purchased by Cromwell for A$405M

a) Government Tenant

b) Long WALE

c) Potential for repositioning

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DEMAND FOR PUBLIC ASSET SALES

2. Government sandstone buildings repositioned as hotels

3. Ausgrid building

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WHERE IS THE DEMAND COMING

FROM – OVERSEAS?

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• AUD weakening

• Australia growing

GDP growth,

leases with

indexation

• Political uncertainty

AUSTRALIA – A PRIME INVESTMENT

DESTINATION FOR FOREIGN INVESTORS

• Low availability of well

leased, quality stock

Transparency

Legal certainty

• Selective availability

of debt

• On-market

campaigns proving

challenging

ISSUES LOOMING

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THE TOP 20 PENSION FUND

INFRASTRUCTURE MANAGERS

INCLUDE 8 AUSTRALIAN MANAGERS

Source: Towers Watson

Manager Global rank AUM USD bn

Macquarie 1 63

IFM 2 11

AMP Capital 8 5

Hastings 9 5

RARE 12 4

CFSGAM 13 4

Access 14 3

QIC 15 3

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WHATS NEXT FOR SALE?

NSW State Lotteries business

Sydney Desalination Plant

Sydney Ports Corporation

Port Kembla Ports Corporation

Newcastle Ports

Energy Assets

o Eraring Energy

o Data Electricity

o Macquarie Generation

o Cobbora Coal Mine

• NSW Lottery Royalties

• Land Titles Office

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WHAT ARE INVESTORS LOOKING FOR

AND WHAT CONSTITUTES A COMPELLING

INVESTMENT OPPORTUNITY?

CASE STUDY 1: CANADA

Infrastructure

• 5 Canadian bidders for Port Botany

• OTPP – purchased Sydney Desalination Plant and Leighton Telco assets

• 2 Canadian pension funds setting up in Sydney

• Branching out into mining infrastructure

• View there to be less competition for infrastructure assets than elsewhere

• Will look at Newcastle Port and other brownfield assets for sale

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WHAT ARE INVESTORS LOOKING FOR

AND WHAT CONSTITUTES A COMPELLING

INVESTMENT OPPORTUNITY?

CASE STUDY 1: CANADA

Infrastructure

• Caisse de Depot purchase 26.7% stake in Port of Brisbane

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Investor Transactions

CPPIB Macquarie Communications Infrastructure (Broadcast Australia) ($1.64B),

Intoll - ($3.4B), IIF privatisation – now GTA ($600M), Northland Shopping

Mall ($455M), Barangaroo ($1B), AMP Capital Retail Trust ($436M)

AIMCO Great Southern Plantations ($415M)

OTPP Sydney Desalination Plant ($375M), 70% of Leighton’s phone and internet

assets (Nextgen Networks, Metronode (data centre operator) and Infoplex

(cloud computing provider) ($620M)

Caisse de

Depot

Melbourne Convention Centre (and other Plenary assets) ($139M)

PSP Privatisation of Charter Hall Office REIT with GIC ($1.8B), Bay Village

($164M), Gasometer 2 ($144M), Raine Square ($458M), investment into

GAIF ($200M)

OP Trust Investment in mining infrastructure

SELECTED CANADIAN INVESTMENTS

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WHAT ARE INVESTORS LOOKING FOR

AND WHAT CONSTITUTES A COMPELLING

INVESTMENT OPPORTUNITY?

CASE STUDY 2: SOUTH KOREA

• Small domestic market

• Large pension fund inflows

• Tensions on the Korean peninsula

• Korean National Pension Service - the pioneer

• Korean Investment Corporation following

• Familiar with structuring requirements for Australia

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Investor Transactions

KNPS Aurora Place ($658M)

Pramerica

Heitman

Lend Lease – Erina Fair ($412M)

Korean consortium (Samsung C&T, Korea

Development Bank,

Hanwa, Korean Teachers Credit

Union)

20.6% stake in Victorian Desalination Project –

A$160M

Korean Teachers Credit

Union

Joined international consortium taking 3.2%

(A$70 million) in East Link Infrastructure Project,

Melbourne

SOUTH KOREAN INVESTMENTS