Palisade Investment Partners has acquired the Tasmanian Gas Pipeline from WestNet, a former Babcock & Brown company, for about half of its $400 million construction cost.
To buy the pipeline, the boutique manager jointly bid with Canadian power and utilities operator ATCO for a portfolio of WestNet assets owned by Canadian infrastructure manager Brookfield Infrastructure Partners. Australian energy utilities investor DUET Group was also involved.
In December 2010, Brookfield completed its acquisition of Babcock & Brown subsidiary Prime Infrastructure, which owned WestNet.
The bidders collaborated because Brookfield refused to sell the WestNet energy utilities separately, says Ian Mitchell, managing director of Palisade.
Palisade paid about $200 million for the Tasmania Gas Pipeline. ATCO bought WA Gas Networks for $1 billion.
DUET Group, which is jointly owned by AMP Capital Holdings and Macquarie Funds Group and was already invested in some of the WestNet assets, increased its stake in the Dampier Bunbury Pipeline to 80 per cent and took full ownership of Victorian gas distributor Multinet.
Despite press commentary doubting Palisade’s ability to fund the acquisition, Mitchell says, the transactions closed on July 29.
He says demand for the Tasmania Gas Pipeline is underpinned by long-term patronage contracts indexed against the rate of inflation. Its customers are Tasmanian industrial entities such as the Tamar Valley Power Station.
The 734 kilometre pipeline, built by Duke energy in 2002 for $400 million, transports gas across the Bass Strait from the Esso and BHP Billiton production plant in Longford, Victoria.