IFM Investors is expected to make an offer for gas pipeline company APA Group, following Australia Government鈥檚 rejection of a AUD13bn (鈧�8.3bn) bid from the Hong Kong-based CK Group.
IFM Investors, along with Canadian pension fund OMERS, is reported to have previously expressed an interest in APA but was awaiting the outcome of the CK bid before making its move.
Australia鈥檚 treasurer, Josh Frydenberg, has officially informed a bidding consortium led by CK Asset Holdings of his 鈥減reliminary鈥� view that its proposed acquisition of APA would be contrary to Australia鈥檚 national interests.
Frydenberg noted that the APA was a unique company, widely held among investors with significant Australian ownership and management.
APA counts Australia鈥檚 industry super fund, UniSuper, as its single largest shareholder.
It is by far the largest gas transmission system owner in Australia with its 15,000km of pipelines representing 56% Australia鈥檚 gas pipeline transmission system, including 74% of New South Wales and 64% of Victorian pipelines, Frydenberg said.
鈥淢y preliminary view reflects the size and significance of APA Group,鈥� he said. 鈥淚t is about the extent to which the proposal is consistent with Australia鈥檚 national interest.
鈥淭he application of our foreign investment policy expressed through my preliminary view is not discriminatory against any investor or country.鈥�
Frydenberg said his view was not an adverse reflection on CK Group or individual companies.
CK Group companies were already substantial investors in Australia鈥檚 gas and electricity sectors, and a significant provider of infrastructure services that millions of Australians relied upon, he said.
The government鈥檚 decision follows public debate and consideration within government about potential national risks arising from China鈥檚 influence over Hong Kong, where CK Group is based.
CK Group had offered AUD11 for each APA share. APA鈥檚 share price closed 8% lower at AUD8.685 a share following Frydenberg鈥檚 statement.
Sources said IFM Investors would baulk at the AUD13bn price tag but, given the level of APA鈥檚 share price now, it had room to make a lower bid while still offering a premium to shareholders.
Because it is owned by Australian industry super funds, IFM Investors would not run into regulatory hurdles, the sources said.
It is yet unknown if CK Group would team up with other Australian groups to make a revised bid for APA.
