SYDNEY, May 10 (Reuters Basis Point) - About a dozen lenders have clubbed a A$1.62bn (US$1.2bn) loan to finance the A$2.6bn acquisition of New South Wales’ land registration agency Land and Property Information by Australian superannuation funds Hastings Funds Management and First State Super.
Among the dozen are Bank of Nova Scotia, Commonwealth Bank of Australia, DBS Bank and National Australia Bank, according to sources.
The loan is levered at 12x LPI’s earnings of A$135m and the margin is expected to be tighter than that IFM Investors and AustralianSuper paid for the acquisition debt for NSW energy company AusGrid. That loan pays interest margins of 105bp, 135bp and 160bp over BBSY for maturities of 3.5, five and seven years, respectively.
The expected pricing on LPI’s loan underscores how margins in Australia now mirror the compression in Asia as lenders chase fewer deals. In the first quarter of 2017, Asia Pacific loan volumes nearly halved to US$110.5bn, the lowest for the period in seven years, while volume in Australia was similarly at a seven-year low, plunging 53% to A$7.15bn.
The leads are preparing to launch the loan into general syndication in June after the acquisition closes, according to one of the sources.
Hastings paid an enterprise value of close to 20x for LPI, in line with the high valuations the NSW government achieved for the recent privatisations of TransGrid and AusGrid.
The strong bidder appetite bodes well for the A$4bn sale of Endeavour Energy, the last of the energy assets for sale. The government is evaluating the bids, submitted on May 1, Reuters reported.
The Hastings and First State Super consortium secured a 35-year concession to manage LPI’s titling and registry services, beating rival bids from Borealis Group, Macquarie Infrastructure and Real Assets and Carlyle Group.
The consortium’s advisers are RBC Capital Markets and Lazard, while the government relied on JP Morgan. (Reporting by Sharon Klyne; editing by Dharsan Singh)