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Denise Tsang

Cheung Kong unit yet to reveal details of sale but debut expected next month

State-owned Singapore Power has trumped the planned separate listing of Cheung Kong Infrastructure Holdings' (CKI) Australia energy assets by initiating  a A$1.6 billion spin-off of its own  offshoot in the country.

The pair will cross swords on the Australia stock exchange as  early as December 14, when SP AusNet is scheduled to debut. SP AusNet will also have a secondary listing on the Singapore Exchange.

Spark Infrastructure, in which CKI is expected to have a minority stake, has yet to reveal its listing time frame, but informed sources said it would release its listing prospectus 'imminently' and a debut was also expected next month.

'The duo are  not only competing against time, but also in pricing and yields,' an analyst with a European brokerage said.

Spark and SP AusNet, which will be listed as  investment trusts to maximise tax advantages, have an overlapping market in the southern state of Victoria.

Spark comprises three key assets in  electricity distribution, or wholesaling  - CitiPower of Melbourne, Powercor Australia of regional Victoria and ETSA Utilities of South Australia.

SP AusNet is primarily an electricity transmission service provider, or retailer, with some distribution services for electricity and gas in Victoria.

According to its listing prospectus, SP AusNet is attracting potential investors by offering an estimated 7 per cent to 8.5 per cent annualised dividend yield in the  12 months to March 31 next year and 7.2 per cent to 8.7 per cent in 2007.

The payout yield is more than double the average of Australia's benchmark index.

The deal  saw Singapore Power offer to sell 49 per cent of SP AusNet at a price ranging between A$1.29 and A$1.57 per share. Investor response to the issue will determine pricing.

Sources said last month that Spark would be controlled and managed largely by Deutsche Bank and  CKI would retain a minority interest in the investment trust following a restructuring on shareholding.

They said the restructuring involved CKI selling  all but 1 per cent of its 50 per cent stake in each of CitiPower, Powercor and ETSA to Spark for  A$1.8 billion.

Despite this, Cheung Kong group's grip will be maintained through CKI's  1 per cent interest and associate Hongkong Electric Holdings' 50 per cent interests in the three utilities.

DBS, Morgan Stanley and UBS are underwriting SP AusNet's issue whereas Deutsche Bank, Merrill Lynch and Citigroup are preparing for Spark's listing.

SP AusNet, which is building reserves  for future acquisitions through the listing, will be Singapore Power's flagship in further penetrating the Australian and New Zealand markets.

CKI chairman Victor Li Tzar-kuoi said in September that Australia was chosen for the  spin-off because infrastructure stocks there commanded a higher valuation.



Singapore Power gets jump on CKI with Australia spin-off