ConnectEast and its advisers are likely to distribute a teaser by mid-March, and by late April open a data room with detailed information, for the sale of a majority stake in its Eastlink toll road in Melbourne, three sources familiar said.
A fourth source, however, said a teaser is likely still a month away and it is yet to be decided when a data room, including detail on what is being sold and traffic modelling, will be released.
Eastlink comprises a 39km toll road and a 1km untolled bypass in Melbourne's southeast. ConnectEast's concession over the road has another 20 years to run until 2043.
One of the eight investors in the concession, New Zealand Superannuation Fund, spearheaded a move late last year to appoint an adviser to begin a sale of its stake as well as for potentially several other shareholders. RBC Capital Markets was appointed.
About five shareholders so far are planning to sell - NZ Super, UK fund University Superannuation Scheme, Korea Teachers Credit Union (managed by Mirae Asset Management's MAPS Capital), Danish fund ATP, and Teachers Insurance Annuity of America’s Nuveen - collectively accounting for about 58% of the asset, the first three sources said.
They said also if the proposals from external bidders are deemed to be low, existing shareholders may choose to make an offer to their partners looking for an exit. If the bids from potential external buyers are high enough, shareholders which are not looking to sell at the moment may change their minds, the sources said.
The other investors in the asset company are Korea’s National Pension Service, Dutch fund APG and China Investment Corp (CIC), according to Infralogic data. CIC started a sale of its stake in 2019, but did not go ahead.
Two sources put the enterprise value of Eastlink at about AUD 4bn (USD 2.7bn) including debt. According to its latest accounts for the year through June 2022, filed with the corporate regulator - the Australian Securities and Investments Commission - it had a related party loan of about AUD 1.2bn at that time and net liabilities of AUD 1.6bn. In November last year, it refinanced AUD 705m of bank debt with tenors of two and five years and in January, it refinanced AUD 295m of the November loan for 10 years.
Bidders may include Transurban; Kohlberg Kravis Roberts (KKR); Macquarie Asset Management (MAM), IFM and QIC, the sources said.
Two of the sources said many would be reluctant to bid against Australia's dominant toll road operator, Transurban, which has publicly stated it is considering a bid, but would need to gain control of the asset. Another toll road investor and operator, Atlas Arteria, last week ruled out a bid.
The shareholders, however, would also need to approve a road operator like Transurban owning the asset as they are barred from owning a stake as per the shareholder agreement.
Spokespeople and officials with the Eastlink investors said to be looking to sell, KKR, MAM, IFM and QIC either declined to comment or did not respond to requests for comment.