WELLINGTON, New Zealand—New Zealand electricity network and gas distribution company Vector Ltd. said Monday it has agreed to sell its electricity network in the capital to
Cheung Kong, the largest listed infrastructure company in Hong Kong, has investments in energy, transport and water infrastructure in Australia, Britain, Canada, mainland China and Hong Kong.
Vector said funds from the sale would be used to retire debt but may also be used for acquisitions in the infrastructure sector.
The decision to sell the asset followed a strategic review begun after Vector received approaches in August 2007, Vector chairman Michael Stiassny said.
"More than four" parties had bid for the network in Wellington, but Stiassny did not reveal details.
Worsening market conditions will lead to other network assets coming onto the market, he said.
"The sale strengthens our balance sheet as we intend to use the funds to retire debt, and while we have no specific plans we think it allows us to be ready ... should other assets become available that we find attractive," he said.
The sale is subject to conditions, including approval by Vector's shareholders and approval by the government's Overseas Investment Office.
Analysts said they don't anticipate the government will intervene to block the sale as it did with Canada Pension Plan Investment Board's partial takeover offer for Auckland International Airport earlier this month.
"They are selling a key New Zealand infrastructure asset, but of course there is no land associated with it like there was with Auckland Airport, so there is probably a reasonable chance it will go through," said Grant Williamson, an adviser with brokerage Hamilton Hindin Greene.
Stiassny said that the assets have been owned twice previously by foreign owners, "so we do not envisage major problems."
