Australian state signs $2.3 billion desalination deal
Australia's New South Wales state has signed a A$2.3 billion ($2.33 billion) deal with a consortium of Hastings Funds Management and Ontario Teachers Pension Plan for the long-term lease of a desalination plant in Sydney, a source with direct knowledge of the deal said on Friday, Reuters reports.
Morgan Stanley (MS.N) and RBC Capital Markets advised the international consortium which will pay A$300 million more than the plant's regulated asset base.
Under the agreement, Sydney Water is locked into a 50-year water supply agreement with the owners of the new plant. The 50-year lease will include the desalination plant, the pipeline and the site.
The consortium beat short-listed bidders Industry Funds Management and Spark Infrastructure Group to the deal. Mitsubishi Corp (8058.T) and Acciona (ANA.MC) dropped out of the running earlier.
NSW Treasurer Mike Baird is set to announce the deal on Friday, which will see the desalination plant's almost $2 billion in debt paid off, freeing up the state's balance sheet.
The consortium will operate the desalination plant and feed output to Sydney Water, which supplies the city of more than 4.5 million people. The plant has a maximum capacity of 250 million litres a day.
The desalination lease is part of a NSW plan to lease some public assets to raise money to build infrastructure. The government has appointed Morgan Stanley to advise it on the long-term lease of Port Botany in Sydney.