Chow Tai Fook Enterprises buys Australia's Alinta Energy
SYDNEY (Reuters) -- Hong Kong's Chow Tai Fook Enterprises (CTFE) on Thursday said it had agreed to purchase Australian gas and electricity retailer Alinta Energy, in a deal two sources familiar with the situation said was valued at about A$4 billion ($3 billion).
It marks the first investment in the Australian energy sector for CTFE, a sprawling privately-held conglomerate controlled by the Cheng family, which is best known for retail arm Chow Tai Fook Jewellery Group. It also controls infrastructure group NWS Holdings.
Alinta, owned by a group of private equity companies including TPG Capital, had been preparing for an initial public offering. Brokers had valued Alinta at an average of A$3.4 billion, making the Chow Tai Fook Enterprises offer attractive in comparison, one of the sources said.
The sources declined to be named because they were not authorised to speak publicly about the deal.
CTFE and Alinta declined to disclose the transaction price.
Australian energy and utility assets are attractive to foreign buyers because of strong growth opportunities, particularly power retailers given electricity prices have soared over the past five years.
But the ability of foreign buyers to complete deals was thrown into doubt last year when the government rejected bids from China's State Grid Corp and Hong Kong's Cheung Kong Infrastructure Holdings for electricity grid Ausgrid on national interest grounds.
The Alinta deal remains subject to approval from the Foreign Investment Review Board but does not appear to qualify for enhanced scrutiny by the newly established Critical Infrastructure Centre, tasked with vetting foreign investments in power grids and ports.
Alinta generates 1,800 megawatts of power from a group of small gas-fired power stations in Australia alongside its retail business but it does not control a power grid.
CTFE said in a statement that it would grow the business by pursuing appropriate investment opportunities in Australia as they arise.