Australian state-owned QIC (Queensland Investment Corporation) has reached contractual close for its joint venture deal with Vector Limited’s New Zealand and Australian smart metering business – Vector Metering – touted as the largest smart meter provider of its kind across Australia and New Zealand.
The acquisition, initially required to be closed by June of this year, remains subject to regulatory approvals and follows Vector’s announcement in December 2022 of QIC as its preferred joint venture partner.
The deal consists of a sale by Vector of a 50% interest in Vector Metering to a new fund and co-investors managed by QIC Infrastructure. The investment is the first asset for this new QIC Infrastructure fund.
Vector Metering owns and manages over 2.3 million meters across the electricity and gas markets in Australia and New Zealand.
QIC’s head of infrastructure, Ross Israel, stated: “With this investment, QIC Infrastructure’s global investments supporting the transition to a low-carbon economy have grown to AUZ$5 billion ($3.3 million).”
The investment, he stated, signals QIC’s investment strategy into energy transition assets.
QIC closes Vector Metering: Smart metering valuation
According to Australian Financial Review reportage from December 2022, Vector picked QIC as its preferred bidder, beating out competition from the likes of Singapore’s Keppel (an infrastructure investment conglomerate) and Hong Kong’s CKI.
According to a press-issued announcement dated December last year agreed key transaction terms for the acquisition imply an enterprise value for Vector Metering of approximately NZ$2.5 billion ($1.6 billion) against a book value of $0.65 billion ($0.41 billion). Conclusion of the deal was expected to result in gross transaction proceeds of around NZ$1.74 billion ($1.1 billion) to Vector.
Citing the critical role of smart meters in decarbonisation of Australia and New Zealand‘s electricity supply, Israel commented on how they have been “rapidly evolving from data processing for timely billing purposes. They are an enabler for electricity networks to manage an ever-increasing volume and volatility of electricity supply due to the broader energy transition and increasing penetration of renewable generation.
“The electricity mass market is Vector Metering’s core competency. The business is the leading provider in New Zealand where we believe its significant scale will support future growth and the extensive roll-out of smart meters in Australia. The latter opportunity represents further growth and investment for the company.”
Patrick Mulholland, senior principal – Infrastructure, QIC, who led the deal, said QIC’s industry experience and relationships across Australia and New Zealand will be critical in refining Vector Metering’s business plan and strategy.
“Both Vector and QIC bring complementary skills to the business that will support it financially and strategically to grow and enable the energy transition,” Mulholland said.
QIC has further plans to invest over AUS$15 billion ($10 billion) in energy transition assets, details of which have not yet been released.
Advisors to the deal were JP Morgan, Craigs Investment Partners, Herbert Smith Freehills and Russell McVeagh.