“We see ourselves as a long-term shareholder,” said Babcock & Brown’s head of infrastructure and project finance business Peter Hofbauer.
“Having said this, there is ongoing pressure for growth and the general trend is towards consolidation in the infrastructure industry.”
GasNet is a former state-owned gas utility privatised during the Kennett era. While it has been actively trying to expand its base, its assets are overwhelmingly based in Victoria.
Hofbauer said that while GasNet had some high quality assets and stable earnings it was constrained by its scale and its dependence on the Victorian market.
GasNet is currently assessing its options after its recent bids for the Epic and Duke pipeline assets were bettered by cashed-up rivals Hastings Funds Management and Duke Energy.
GasNet chief executive Christine O'Reilly said recently that the company was considering whether it should keep trying to expand or to encourage takeover offers.
The corporation's preference was to expand, but if a merger or takeover offer was made the board would consider what was in the best interests of shareholders, Reilly told the Australian Financial Review.
Shortly after that interview, Reuters reported that several buyers – including Australian Pipeline Trust and Diversified Utilities and Energy Trust – were interested but most are seeking an acquisition rather than a merger.
This could make Babcock & Brown’s interest in GasNet very attractive to the utility’s current board.
“GasNet want to expand and acquire new assets,” Hofbauer said.
“Babcock & Brown have some skills in that area.”
Hofbauer said Babcock & Brown hoped to meet with the GasNet board and Management to discuss GasNet’s future direction and strategy. Depending on the outcome of these discussions, Babcock & Brown could seek board representation.
GasNet said it would meet with Babcock & Brown, as it would with any major shareholder.
Babcock & Brown has developed a portfolio of infrastructure and project finance assets in areas that include electricity distribution and power generation from gas, coal, wind and biomass.
Meanwhile, GasNet is still chasing growth opportunities. It is a member of one of the consortiums bidding for the Trans Territory pipeline contract.
GasNet has linked with Macquarie Bank and engineering and construction group McConnell Dowell to bid for the $550 million Northern Territory pipeline project.
The consortium was shortlisted alongside two other consortia. One of these consortia comprises four partners. Multiplex Group, Italian oilfield equipment maker Saipem and Perth-based energy group Alinta Ltd have joined forces with an investment banker – Babcock and Brown Ltd.
