10/10/2016 - 15:44

AMP buys $232m Kalgoorlie prison

10/10/2016 - 15:44

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AMP Capital has bought the newly built Eastern Goldfields regional prison, joining the likes of Catholic Super, Australian Super and Aberdeen Asset Management as private owners of public infrastructure assets in Western Australia. Click through to see the BNiQ listing of public assets in private hands.

AMP buys $232m Kalgoorlie prison

AMP Capital has bought the newly built Eastern Goldfields regional prison, joining the likes of Catholic Super, Australian Super and Aberdeen Asset Management as private owners of public infrastructure assets in Western Australia.

AMP Capital has bought the prison from Lendlease Infrastructure Investments and MLC, in a deal believed to be worth between $60 million and $80 million.

Privatisation and PPP deals in WA: 1961 to 2016

ASSET SALES
ASSET YEAR SOLDSALE PROCEEDSORIGINAL BUYERCURRENT OWNER
State Building Supplies1961£1mHawker Siddeley n/a
SGIO1994$165mInitial Public OfferingIAG
Bankwest1995$900mBank of Scotland  Commonwealth Bank
Healthcare Linen1996$9mWestern Pacificn/a
Perth airport 1997$643mVarious institutional investorsHastings (59.9%), Future Fund (29.7%), other (10.4%)
Dampier Bunbury natural gas pipeline1998$2.4bnEpic Energy DUET Group (80%), Alcoa (20%) 
Jandakot airport1998$7mJandakot Airport Holdings (Hans Versteeg and Kevin Pollock)Ascot Capital and Kirsh Group
Westrail Freight2000$585mAust Railroad Group (Wesfarmers and Genesee & Wyoming)Aurizon (above rail assets), Brookfield Rail (below rail assets)
AlintaGas2000$615mInitial Public Offering (Utilicorp as cornerstone investor)Alinta Energy (power stations), ATCO Group (gas network)
Kaleeya Hospital2014$17.5mSouthern Cross CareSouthern Cross Care
Port Hedland International Airport 2015$165mAMP Capital consortiumAMP Capital consortium
Water Corp engineering business2015$10.5mRCR TomlinsonRCR Tomlinson
Market City2016$135mPerth Markets Perth Markets 
Keystart loan book2016$1.35bnBendigo and Adelaide BankBendigo and Adelaide Bank
PUBLIC PRIVATE PARTNERSHIIPS
ASSETYEAR BUILTCOSTDEVELOPERCURRENT OWNER
DOLA building (Midland)1993$55mConsolidated Constructionsn/a
Joondalup Health Campus*1996n/aRamsay HealthcareRamsay Healthcare 
Peel Health Campus1997n/aHealth Solutions WA Ramsay Healthcare 
Fremantle Justice Complex 2001$15mMultiplexn/a
PCEC2003$225mMultiplex (private and govt funding)  Wyllie Group
District Court 2004$195mWestern Liberty - Multiplex, G4S Custodial, Merrill CorporationAustralian Super
Mundaring water plant 2011$370mHelena Water - Acciona Agua, TRILITYAberdeen Asset Management (49.9%), Acciona Agua (25.05%), TRILITY (25.05%)
QEII car park 2011$140mCapella Parking - Capella Capital, ProBuild and EziparkCatholic Super (67%), Lendlease (33%)
Eastern Goldfields Regional Prison 2012$232mAssure Partners - Capella Capital, John Holland, Pindan Contracting, Honeywell.AMP Capital
Midland Health Campus*2012$430mSt John of God Health Care + MultiplexSt John of God Health Care
Perth Stadium 2014$902mWestadium consortium - Brookfield, Multiplex and John LaingJohn Laing Investments, Aberdeen Infrastructure Investments
New Schools PPP2015$370mEduwest - Macquarie Capital, Spotless, Perkins Builders, Badge ConstructionsMacquarie Corporate Holdings, Aberdeen Infrastructure Investments

* Public and private hospitals co-located.

Lendlease and MLC were the original equity investors in the Assure Partners consortium, which was contracted by the state government in 2012 to design, build, fund and operate the 350-bed prison at an up-front cost of $232 million.

Debt funding was provided by the Commonwealth Bank and Japan’s Mizuho Corporate Bank, which are still lenders to the project.

Other consortium members were project sponsor Capella Capital, construction contractors John Holland and Pindan, and architect Cox Howlett + Bailey Woodland.

The new prison, which has replaced a 100-bed facility, took its first inmates in August, about eight months after the targeted completion date.

The private consortium will run the prison for a period of 25 years and will be paid $140 million to do so, according to details published on the state government's tenders web site in 2013.

Honeywell has signed-up as the facilities management and security sub-contractor.

AMP Capital Community Infrastructure Fund manager Andrea McElhinney said it was an attractive investment opportunity.

“This project provides long-term, highly predictable cash flows that are underpinned by the Western Australian government,” she said in a statement.

“It has an attractive risk and return profile that fits perfectly with CommIF’s investment mandate.”

CommIF is currently invested in 13 social infrastructure assets in Australia and New Zealand in the education, health, justice, defence, water and community sectors.

CommIF’s investor base is made up primarily of domestic institutional investors and high-net-worth individuals.

Ms McElhinney said social infrastructure provided investors with both attractive returns and community benefits.

“Offshore interest in Australian infrastructure has been a major theme of the local market during the last two years and social infrastructure has not been immune to this, with the first offshore investor coming into CommIF this year,” she said.

King & Wood Mallesons acted as AMP Capital’s legal adviser.

AMP Capital’s purchase of the prison comes 15 months after it led a consortium that paid $165 million for ownership of Port Hedland International Airport.

The 50-year lease with the Town of Port Hedland also included a $40 million capital investment requirement.

The Kalgoorlie prison and Port Hedland airport are among nearly 20 infrastructure assets in WA that have either been sold to the private sector (via long-term leases) or developed through a public private partnership (see table).

PPP projects currently underway include the $900 million sporting stadium at Burswood.

While these projects are often associated with the construction contractor – Multiplex is building the stadium – they are only possible when investors put up equity to underpin the funding.

In the case of the stadium, this is UK-based groups John Laing Investments and Aberdeen Infrastructure Investments, which will be part-owners with the state government.

Aberdeen also owns half the $370 million Mundaring water treatment plant, completed in 2011, and is an investor in the Eduwest consortium which has been contracted by the WA government to design, build, finance and maintain eight new schools in Perth.

The Eduwest consortium also includes Macquarie Capital, Spotless Facilities Services, Perkins Builders and Badge Constructions WA.

Other investors in PPP projects in WA include Catholic Super, which is the majority owner of the multi-storey car park at QEII medical centre, Australian Super, which owns the privately-run District Court building in the city, and Wyllie Group, which owns the PCEC.  

The term PPP encompasses a range of business models.

In many cases, government agencies continue to deliver the core services, such as teaching in the planned new schools.

In other cases, like the recently completed Midland Health Campus, the government has been a co-investor but the services will be provided by St John of God Health Care.

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