Brookfield prepares energy businesses for sale

01 April 2019 - 12:00 am UTC

Brookfield is considering selling parts of its Enwave business in Australia, including Tas Gas Networks and its retail arm, and may add its District Energy business to the process, according to two sources familiar with the matter.

The company wants to conclude the sale by the end of the year, the sources said, confirming local media reports that the sale is being considered but saying it is at an early stage. The process may start by the end of June with a teaser or information memorandum, but it may be later than that because the company is still working out what exactly will be sold.

Enwave Australia includes Enwave Energy, Water West, Tas Gas Networks and Tas Gas Retail. 

Emwave also owns 55% of Flow Systems, but in a deal with its creditors after it was placed in voluntary administration late last year, Brookfield is taking full control of that business.

Tasmanian monopoly
Tas Gas Networks, the largest part of Enwave, is the monopoly owner and operator of Tasmania’s 700km gas distribution network. It is also a major gas retailer. The network is relatively new. Construction started in 2003 and the latest stages were completed in 2007.

This asset will suit traditional infrastructure investors due to its monopoly status, but the gas retail business is more aligned with energy distribution and retail companies like AGL, Origin, EnergyAustralia or Alinta.

Brookfield’s District Energy business may also be added to the sale. It provides heating and cooling as well as water and wastewater via various means for buildings and precincts around Australia.

It has two precinct sites in South Australia – one for energy supply and one for water – and two in NSW where it supplies energy.  In Victoria, District Energy supplies power to 11 regional towns. It also operates a 1.5MW CoGen powerplant in Tasmania.

Depending on what is included in the sale, the deal altogether could be worth up to AUD 500m (USD 355m). At that size, it would likely be more attractive to mid-sized infrastructure funds such as AMP Capital, ICG and Palisade, according to one of the sources.

Palisade manages and operates the Tasmanian Gas Pipeline, the only subsea gas supply from Victoria to Tasmania. It supplies several Tas Gas Networks facilities.

ICG owns Esperance Energy Project, a 336km natural gas pipeline running from Kambalda to Esperance in Western Australia.

A spokesperson for Brookfield declined to comment.

 

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