China’s State Grid eyes Powerco stake one year after Hong Kong’s Li Ka-shing walked away from takeover bid

The world’s largest utility operation – State Grid Corporation of China – is reportedly eyeing a 42 per cent stake in NZ”s second-largest electricity and gas distribution company Powerco.

The stake is said to be worth more than $450m.

Hong Kong’s richest man Li Ka-shing – whose company owns Wellington Electricity Lines  – walked away from a proposed bid early last year when xenophobia spike by the Crafar farms sale saga was at its peak. State Grid lost out to Li Ka-shing’s Cheung Kong Infrastructure in the contest for the Wellington lines company.

Bloomberg reports State Grid has appointed Macquarie as its financial adviser ahead of a month-end deadline for indicative bids, in a process run by Barclays on behalf of Brookfield Infrastructure Partners.

Bloomberg also notes that Australian investment manager QIC owns the remaining 58 per cent of Powerco, and did not exercise its right of first refusal to buy Brookfield’s stake. Brookfield acquired the stake through its $1.60 billion acquisition of Australia’s Prime Infrastructure in 2010.

“Powerco’s earnings before interest, tax, depreciation, amortisation and financial derivatives for the six months to September 30 was $NZ123.7m. The company distributes electricity to 320,000 households and businesses in New Zealand’s North Island through 30,000km of underground and overhead electricity lines. It also distributes natural gas to more than 102,000 North Island households,” says Bloomberg.