GE looks to offer power plant IPO

A $1.2 billion power plant in Western Australia linked to one of the world’s largest alumina refineries owned by BHP Billiton is being positioned for an initial public offering.

General Electric’s Worsley multi-fuel cogeneration plant near Collie, 189km southeast of Perth, was built to meet the expansion requirements of the Worsley Alumina refinery, 86 per cent-owned by BHP.

The plant has a 25-year “take or pay” contract with Worsley Alumina, its main customer, with price increases pegged to inflation.

Sources confirmed yesterday that GE Energy Financial Ser­vices was looking to sell the asset via an initial public offering on the Australian Securities Exchange through Macquarie Capital, with its market capitalisation estim­ated to be between $484 million and $512m and its enterprise value $1.2bn-$1.3bn.

GE declined to comment yesterday. However, it is believed GE could decide to proceed with a float by the end of next month, driven by the limited availability of high-yielding listed infrastructure investment opportunities.

A trade sale of the asset could also be a possibility.

Bullish prices have been paid in recent infrastructure asset sales and listed companies in the energy infrastructure sector such as Duet Group, APA and takeover target Envestra have all rallied in recent months.

The Worsley asset was previously in the hands of Griffin Group, the company of embattled coal baron Rick Stowe, which was selected in 2006 following a competitive bid process for the development of the Worsley plant.

The plant, completed in January, is now fully owned by GE Energy Financial Services.

Worsley is a two unit multi-fuel cogeneration plant with a capacity of 104MW of electricity.

Once listed, the power plant is expected to have debt levels of 60 per cent and generate a yield of 8-9 per cent for the 2015 financial year.

Flyer documents have been sent out for the asset in recent days.

Sources said there were similarities to the Woolworths pub landlord ALE Group because of the bond-like returns.

Worsley is an integrated bauxite mining and alumina refining operation and supplies about 5 per cent of the global alumina market. A listing of the power plant could coincide with the sale of billions of dollars’ worth of gas infrastructure assets linked to major Queensland projects.

British energy giant BG Group is seeking indicative bids through adviser Goldman Sachs for about $2.5bn worth of assets, including a 540km pipeline to carry coal-seam gas from the Surat Basin to a processing plant on Curtis Island.

Among the interested bidders is thought to be Cheung Kong Infrastructure, Industry Funds Management, Hastings Funds Management and a consortium comprising APA Group with Japan’s Marubeni.

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