The NSW Government on 31 August 2018 announced a 51 per cent stake in Sydney Motorway Corporation (SMC) had been awarded to Sydney Transport Partners.
The $9.26 billion in proceeds from the transaction will fund the final stage of WestConnex, the critical M4-M5 Link which will connect two of Sydney’s busiest motorways.
The State announced its plan in May 2017 to sell a majority share in SMC.
SMC was established by the State to finance WestConnex by incorporating an initial investment by the State alongside Commonwealth and private sector debt supported by toll revenue.
The sale forms part of the Government’s core strategy to build budget strength while delivering a once-in-a-generation infrastructure pipeline that creates jobs and drives economic growth.
For more information see the media release.
The NSW Government announced the long-term lease of 50.4 per cent of Endeavour Energy to Advance Energy on 11 May 2017, delivering $7.624 billion to the State in gross proceeds.
Advance Energy is an Australian-led consortium comprised of Macquarie Infrastructure & Real Assets (30.16%), AMP Capital on behalf of Retail Employees Superannuation Trust (25%), also, Canada’s British Columbia Investment Management Corporation (25%) and the Qatar Investment Authority (19.84%).
The Government will retain a 49.6 per cent interest in the assets and will also have an ongoing role as the lessor of the business.
Endeavour Energy provides electricity to 2.5 million people in households and businesses across Sydney’s Greater West, Blue Mountains, Southern Highlands, the Illawarra and the South Coast.
The NSW Government will retain a 49.6 per cent interest in Endeavour Energy and will have ongoing influence over operations as joint-investor, lessor, licensor and as safety and reliability regulator. Endeavour Energy will continue to be regulated by the Australian Energy Regulator, which determines network prices.
Land and Property Information titling and registry division
The NSW Government transacted the Land and Property Information (LPI) titling and registry division under a 35-year concession in April 2017.
The legislation enabling this transaction, the Land and Property Information NSW (Authorised Transaction) Act 2016 passed NSW Parliament in September 2016.
The legislation provides a range of legislative and regulatory safeguards to protect the integrity of the property titling system.
The NSW Government continues to guarantee title under the Torrens Assurance Fund (TAF).
The TAF, which compensates landowners who suffer a loss due to fraud or error in title registration, will continue to operate during the concession as it does today.
Under this legislation, the NSW Government will retain full ownership of all land title data and data must be stored in Australia.
A newly created regulator, the Office of the Registrar General, will monitor and enforce the operator’s performance in respect of defined service levels, KPIs and the security of the data.
Superannuation Administration Corporation (Pillar Administration)
The sale of Pillar Administration, one of the largest superannuation administration businesses in Australia, to Mercer (Australia) Pty Ltd for $35 million was announced on 2 December 2016.
Mercer has made a 10-year commitment to maintaining operations in the Illawarra region.
The legislation enabling this transaction, the Superannuation Administration Corporation (Pillar) (Authorised Transaction) Act 2016 passed NSW Parliament in May 2016. A formal sales process commenced shortly afterward.
As part of its long term lease of 49 per cent of the State’s electricity network, in October 2016 the NSW Government announced the long term lease of 50.4 per cent of Ausgrid to IFM Investors and AustralianSuper, an all-Australian consortium. The Government will retain 49.6 per cent interest in the assets and will also have an ongoing role as the lessor of the business.
Ausgrid operates the largest electricity distribution network in the National Electricity Market by regulated asset base, customer numbers, electricity delivered and maximum demand.
This transaction delivers gross proceeds of $16.189 billion to the State and will help fund critical infrastructure projects as part of the Government’s $20 billion Rebuilding NSW plan.
The State will continue its roles as licensor and safety and reliability regulator of Ausgrid, while the Australian Energy Regulator will continue to determine network revenue. The consortium has also signed the Electricity Prices Guarantee which confirms that total network charges in year ending 30 June 2019 will be lower than those in year ending 30 June 2014.
In November 2015 the NSW Premier Mike Baird and the NSW Treasurer, Gladys Berejiklian announced the NSW Government successful lease of TransGrid to the NSW Electricity Networks.
TransGrid operates and manages the major high voltage electricity transmission network in NSW and the ACT, connecting generators, distributors and major end users. TransGrid comprises of 99 bulk supply substations and more than 12,900 kilometres of high voltage transmission lines and cables.
The transaction has delivered gross proceeds of $10.258 billion which will help fund a raft of infrastructure projects across the State as part of the Government’s Rebuilding NSW plan.
The successful consortium, NSW Electricity Networks, is an Australian-led consortium which consists of:
- Caisse de dépôt et placement du Québec (CDPQ), a Canadian pension fund
- Hastings Fund Management, as manager of Utilities Trust of Australia
- Tawreed Investments Limited, the global direct infrastructure investment vehicle of the Abu Dhabi Investment Authority
- Wren House Infrastructure Management Limited, a wholly owned subsidiary of the Kuwait Investment Authority
- Spark Infrastructure, a specialist, internally-managed infrastructure fund which is listed on the ASX
The NSW Government will retain significant influence over TransGrid as lessor, licensor, safety and reliability regulator and through the planning system. TransGrid will also continue to be regulated by the Australian Energy Regulator which determines network charges.
After an extensive and competitive selection process, the NSW Government completed the transfer of the Home Care Service of NSW to Australian Unity on 19 February 2016.
This was a major milestone for the NSW Government in the implementation of the National Disability Insurance Scheme (NDIS).
Home Care helps older people and people with disability to live independently in their own homes.
One of the NSW Government’s key objectives was to select a non-government operator who could deliver continuity of service and prepare Home Care for the national aged care reforms and the NDIS.
Under the transfer process, all clients and around 4000 employees were transferred to Australian Unity.
The $100 million unlocked by this transaction will be reinvested in the disability sector to help with the transition to the NDIS.
Electricity Generation Transactions
The Electricity Generation Transactions commenced in late 2012 and generated more than $2 billion in gross transaction proceeds and reduced State debt by $1.2 billion.
By undertaking the transactions, including the termination of the Cobbora coal supply agreements, the State has avoided liabilities of approximately $2 billion and has removed the State’s ongoing exposure to volatile movements in the wholesale electricity market.
As a result of the transactions, more than $860 million was paid into the Restart NSW Fund for use on priority infrastructure projects across NSW.
The transactions were conducted sequentially and included the sale of:
- the GenTrader assets of Eraring Energy (Eraring and Shoalhaven power stations) to Origin Energy and Delta West (Mount Piper and Wallerawang power stations) to Energy Australia for combined cash proceeds of $210 million;
- Green State Power’s renewable energy assets to Trustpower for gross proceeds of $72 million;
- Macquarie Generation’s assets (Bayswater and Liddell power stations) to AGL Energy for gross proceeds $1.505 billion;
- Delta Electricity’s gas-fired Colongra power station to Snowy Hydro Ltd for gross proceeds $234 million;
- Delta Electricity’s Vales Point power station to a joint venture headed by Sunset Power International for gross proceeds of $1 million; and
- Brown Mountain Power Station to Cochrane Dam Pty Ltd for gross proceeds of $4.5 million.
As part of the Eraring Energy transaction, the State negotiated a settlement payment of $300 million to terminate the Cobbora coal supply agreements, relieving the State of a $1.5 billion liability to develop and operate the mine, the largest of the $2 billion in liabilities the State avoided as a result of the Energy Generation Transactions.
Port of Newcastle
The long-term lease of the Port of Newcastle was finalised on 30 May 2014 raising gross proceeds of $1.75 billion.
The successful bidder for the Port was Port of Newcastle Investments, equally comprising Hastings Funds Management and China Merchants Group.
The 98 year lease includes the lease of port land owned by the State; the right to use, maintain and charge port users for the commercial use of the channel; and commercial control of the shipping scheduling (subject to the safety and regulatory control of the Harbour Master).
Under the lease, the Government retains freehold ownership of the land, the pilotage and Harbour Master functions and Port Safety Operating Licence responsibilities, including responsibility for dangerous goods approvals and emergency response; and administration of the coal chain Capacity Framework Arrangements at the Port.
Some employees of Newcastle Port Corporation transferred to the private Lessee to ensure continuity of the business. Employees moving to the Lessee had the same protections and entitlements that were afforded to the staff at Sydney Ports Corporation and Port Kembla Port Corporation.
The lease ensures public access arrangements at the Port are maintained. Existing regulatory oversight in areas such as price monitoring and the environment also remain in place.
The long term lease of the port has released capital that strengthens the State’s credit metrics, and enhances the growth prospect of the port, through better access to global capital and infrastructure expertise.
The Newcastle transaction demonstrated the high value investors place on quality infrastructure in NSW, and built on the NSW Government’s successful track record in recycling mature State-owned assets to fund major new infrastructure projects.
Port Botany and Port Kembla
Port Botany is Australia's second busiest container port, servicing the largest population base in Australia whilst Port Kembla is Australia's largest vehicle import hub and serves as a key export facility for coal and other bulk products.
Following a six-month competitive bidding process attracting a strong field of bidders from Australia and around the world, the NSW Government announced in April 2013 that a 99-year lease of State-owned port assets Port Botany and Port Kembla had been awarded to the NSW Ports Consortium.
The parties in the consortium includes:
- Industry Funds Management (IFM), an Australian Infrastructure investor owned by Industry Super Holdings Pty Ltd, the holding company for the Members Equity group of companies, which in turn is owned by a large number of Australian superannuation funds.
- AustralianSuper, an Australian Super Fund
- Tawreed Investments Limited, the global direct infrastructure investment vehicle of the Abu Dhabi Investment Authority
The transaction delivered an outstanding financial return for the state, including over $4.31 billion from the Port Botany transaction package and $760 million from the Port Kembla transaction package.
Net proceeds from the two leases were invested in the Government’s infrastructure fund, Restart NSW, with $100 million of the fund dedicated for infrastructure projects in the Illawarra.
The Government retains regulatory oversight of key areas and port matters including a price monitoring regime established to ensure transparency on pricing outcomes, similar to other major Australian capital city ports.
The State retained existing security and emergency response functions, which are performed by the Port Authority of New South Wales.