CKI pays $1.3b for 40pc stake in Sydney toll-road project
Australian utilities are seeing wider exposure by the firm controlled by Li Ka-shing
Cheung Kong Infrastructure Holdings (CKI) has invested HK$1.3 billion to become the biggest shareholder of a Sydney toll road project in the latest foray by a Li Ka-shing-controlled company into the Australian utilities sector.
Cheung Kong on Friday acquired 40 per cent of the Lane Cove Tunnel Co, which in December last year won a 33-year concession to build, operate and transfer a tunnel that connects the northwestern suburbs of Sydney with the central ore.
The 3.6km tunnel project, on which building began in April, will cost an estimated A$1.7 billion (HK$9.31 billion) and it is scheduled for completion by mid-2007.
'We have been pursuing quality infrastructure and transportation projects globally and this acquisition represents another important milestone,' group managing director Kam Hing-lam said in statement. 'The tunnel promises a long term and sizeable return to CKI.'
The project, being built by fellow shareholder Thiess John Holland, is CKI's second toll road investment in Australia's key commercial centre, following the Sydney Cross City Tunnel.
The company expects a double-digit return on investment in the project, financing for which was completed in December last year.
According to ABN Amro, another shareholder, Lane Cove was the first greenfield toll road project to be funded using capital markets rather than traditional bank debt.
The bank raised A$542 million through a combination of capital indexed and nominal bonds for the project.
Australian utilities plays have become a key focus for CKI, particularly firms specialising in water and electricity provision.
In March, CKI and a sister firm bought a 25-year franchise in Aqua Tower, which supplies water to 50,000 residents in Victoria.
CKI's Australia portfolio, buoyed by a first-time contribution from Melbourne electricity distributor Citipower, led the group's earnings growth last year when it contributed HK$473 million in net profit.
According to Mr Kam, the Lane Cove project could cut as much as 20 minutes off the 30-minute drive from neighbourhoods in the city's northwest to central areas.
Round-trip tolls will be set at about A$7 for passenger cars and the firm projects about 9,400 cars will use the tunnel per hour during peak periods. Truck levies are estimated at A$14 per round trip.
The project is expected to employ 5,000 people over the next three years and the tunnel will return to the New South Wales government at the end of its franchise.
The Li Ka-shing (Overseas) Foundation is also listed as a shareholder but it is not clear whether that makes Mr Li a controlling shareholder in the project.
CKI did not disclose from which of the partners it bought the 40 per cent share on Friday.
