Brookfield’s $10.2bn Acquisition of Ausnet

By Léo Clément, Dorian Song (HEC Paris), Nancy Huang, Daniel Acret (University of Melbourne)

 

Overview of the deal

Acquirer: Consortium led by Brookfield Asset Management Inc.

Target: AusNet Services

Total Transaction Size: A$10.2 billion

Closed date: 2022/02/18

Acquirer advisor: Dentons

Target advisor: Allens


AusNet was the last publicly traded electricity infrastructure company, meaning that the sector is now fully privatised. The deal follows KKR’s buyout of Spark Infrastructure. Brookfield’s consortium includes Alberta Investment Management Corporation, Healthcare of Ontario Pension Plan, and Investment Management Corporation of Ontario. Such a consortium continues the trend of pension funds investing in stable long-term cash flows yielded infrastructure. Brookfield’s bid outcompetes gas giant APA group’s previous offer. AusNet’s shareholders massively voted in favour of the A$2.65 per share offer (>99%), representing a premium of 34% compared to the A$1.98 price at which the company’s share was trading before the news of the bid.


Company Details (Acquirer - Brookfield)

Brookfield is an asset management company focused on alternative investment and has more than US$688B in assets under management as of 2021. While headquartered in Canada, it operates worldwide and focuses on real estate, infrastructure and renewable energy.


Founded in 1997, headquartered in Toronto, Ontario, Canada

CEO: Bruce Flatt

Number of employees: ~181,000

Market Cap: US$85.9Bn (as of 19/04/2022)

EV: ~US$255.8Bn

LTM Revenue: ~US$75.7Bn

LTM EBITDA: ~US$19.1Bn

LTM EV/Revenue: 3.4x

LTM EV/EBITDA: 13.4x


Company Details (Target - AusNet)

AusNet is an energy distributor and service provider. It produces and delivers electricity and provides natural gas by owning the distribution assets in Victoria, Australia.


Founded in 1994, headquartered in Southbank, Melbourne, Victoria, Australia

CEO: Tony Narvaez

Number of employees: 1,500

Market Cap: A$7.0Bn (as of 31/03/2021)

EV: A$17.8Bn

LTM Revenue: A$1.9Bn

LTM EBITDA: A$ 1.2Bn

LTM EV/Revenue: 9.3x

LTM EV/EBITDA: 15.1x


Projections and Assumptions

Short-term consequences

Brookfield’s strategy appears to be grounded in the long-term, with Upson, Brookfield’s head of the Asia Pacific, reportedly declaring, “we are planning to… build the infrastructure required to get to net-zero.” Despite this long-term focus, the taking private of AusNet has had clear short-term benefits, with the increased f