Australian superannuation fund UniSuper is seeking to exit its 9.97% stake in Australian pipeline operator APA Group, according to two sources familiar.
The super fund has been selling APA stock on the open market, reducing its ownership to 11.39% last month from 12.52%, and then to 9.97% this month.
The sources added that UniSuper is also trying to sell its entire stake if it can find a willing investor. APA has a AUD 12.2bn (USD 8.25bn) market capitalisation.
UniSuper, with AUD 115bn funds under management, is the university sector's industry super fund. Like many super funds, it has been under pressure to get out of fossil fuel investments. APA is UniSuper's largest fossil fuel investment, according to its Climate Risk and Our Investments report.
The latest report released this month covering the year through June 2022 does defend UniSuper's investment in the gas pipeline operator, noting that: "With its strong cash flows and high yield, APA represents an excellent fit to match liabilities." Separately, it said that UniSuper owned a total return of 33% from its APA investment last year.
Transition ability
APA's business mostly consists of running gas pipelines, so any new buyer would need to take a positive view of APA's ability to manage the energy transition. They would also have to take a view of APA's growth prospects.
APA has been an active bidder for Australian energy and renewable assets. Last year, it bought the Basslink interconnector between Tasmania and Victoria out of bankruptcy. It is also reportedly considering bidding for Alinta's Pilbara power assets and for Spark Renewables.
The company lost out in bids for CWP Renewablesand Tilt Renewables, and last year it gave up on years of trawling the US market for a transformative acquisition.
At the same time, APA's CEO and Managing Director, Rob Wheals, quit. He was subsequently replaced by Adam Watson, the group's chief financial officer.
Over the past year, APA's share price has declined by around 6.85% to AUD 10.34 from AUD 11.10.
In 2018, Hong Kong's CKI Group attempted to buy APA for AUD 22bn, but the bid was blocked by the Australian government.
A spokesperson at UniSuper did not respond to a request for comment. A spokesperson for APA declined to comment.
