Brookfield shelves asset sale due to coronavirus effects

The asset manager has pulled plans for either a private sale or IPO for an Australia-based coal export terminal amid travel restrictions and market volatility.

Brookfield Asset Management has indefinitely delayed plans to sell its Dalrymple Bay Coal Terminal in Queensland as a result of travel restrictions and market volatility caused by coronavirus.

The firm has been undertaking a dual-track sales process for the asset, engaging with private buyers on a sale while also exploring the possibility of listing the asset through an initial public offering.

But the coronavirus pandemic has put paid to both options, sources familiar with the sale told sister publication Infrastructure Investor.

On the private sale side, travel restrictions have meant that it has proved difficult for prospective buyers to travel to Queensland and view the asset in person as part of their due diligence processes.

Public markets volatility caused by fears over the spread of the virus, which has prompted concern of a global recession, has meant that pursuing an IPO is also not seen as a viable option at present, in addition to making travel for investor roadshows difficult.

A source familiar with the process said that Brookfield intends to try and sell the asset again at some point in the future but that it is too early to say when this might be.

Dalrymple Bay Coal Terminal is regulated by the Queensland Competition Authority and handles coal from more than 30 mines in the state’s Bowen Basin. It is one of the largest coal export terminals in the world, with capacity to export more than 85 million tonnes per year. It is being operated by Brookfield under a 50-year lease from the Queensland government, with an option to extend for a further 49 years.

Information memoranda on the asset were sent out to prospective investors in the run-up to Christmas last year, with indicative bids due in February this year.

The asset, which has been marketed by Bank of America and HSBC, was likely to fetch a price of at least A$2 billion ($1.3 billion; €1.2 billion).

Brookfield Asset Management declined to comment on the sale postponement.