And the bankers are chomping at the bit,

FIN R/v 18Jan 2013

James Eyers

The prospect of lucrative advisory fees from Queensland’s pursuit of a $10 billion sale of its power assets will have investment bankers chomping at the bit. Working on scoping studies or any transaction process could deliver millions of dollars in fees to the successful banks. In relatively quiet markets, competition among bankers for such a fee windfall will be cutthroat.

Advisers with a close knowledge of the assets that might be sold, which include CS Energy, Stanwell Corporation and Powerlink, will also be in demand from potential acquirers.

Anticipating additional asset sales after the Queensland government off-loaded the Port of Brisbane and QR National in recent years, many bankers have already been heading to the Sunshine State to develop the relationships and insight necessary to put them in the running to score further work. None of the major bulge brackets have offices in Brisbane, so most advisers tend to fly in for meetings from the southern capitals.

Brisbane-based RBS Morgans and independent adviser Rothschild have already been engaged by the Queensland government to assist with recent asset sales.

RBS Morgans, led by local deal maker extraordinaire Tim Crommelin, was closely involved with the sale of rail operator QR National, while Rothschild advised the Queensland government on the $2.1 billion sale of the Port of Brisbane.

Premiers and Prime Ministers

Independent advisers are sometimes favoured by governments, who adopt high levels of prudence when selling assets, as they are seen as being free of potential conflicts. A number of independent advisers retain former politicians on their books to assist with development relationships with governments.

The chairman of the Rothschild advisory board is Nick Greiner, the head of Infrastructure NSW and former NSW premier. Another independent adviser, Lazard, counts former Prime Minister Paul Keating and former finance minister Lindsay Tanner among its advisers.

Other independent or boutique advisers that could go after the work in Queensland include Investec, Greenhill, Gresham and BurnVoir. Other Investments banks that could be expected to seeking a role on the power sale - which the Newman government has said will not take place until after an election in 2014 - would include Macquarie, Goldman Sachs, Morgan Stanley, Credit Suisse, UBS, JPMorgan and CIMB.

Goldman Sachs and Morgan Stanley have been working closely with the NSW government. Goldman advised on the successful sale of the NSW desalination plant and is the financial adviser on the $3 billion privatisation of the state’s electricity generators. Morgan Stanley is

working on the sale of Port Botany and Port Kembla. CIMB, a new entrant in the local investment banking market, is preparing for government roles, having retained Michael Lambert, the former NSW Treasury secretary, and Kay Stuart - who worked on the $15 billion Queensland Asset Privatisation Program.

The sale of Queensland power assets is far from the only asset sale gig around. Infrastructure Australia, in a report last October, called for the sale of $200 billion of assets including power generators, airports, and ports. Assets include Snowy Hydro, the three NSW energy distributors, water retailer Sydney Water and ports in Newcastle, Gladstone, and across Western Australia and in Tasmania. Hundreds of millions of investment banking fees will flow from these projects.

Lining up

Here is a list of some investment banks that worked on recent asset sales for various state governments:

■ Port of Brisbane (completed): Rothschild

■ QR National (completed): RBS Morgans

■ NSW desalination (completed): Goldman Sachs

■ NSW electricity generators (ongoing): Goldman Sachs; Citigroup (sale of the Cobbora coal project).

■ Port Botany (ongoing): Morgan Stanley

■ South Australian Lotteries (completed): Investec

■ Tote Tasmania (completed): Investec