Good evening,

UniSuper, the $135 billion industry superannuation investor, has given its bankers the go-ahead to launch a sale process for its 35 per cent stake of the Victorian desalination plant, capable of pumping a third of Melbourne’s annual water needs from seawater in times of drought.

Street Talk understands Barrenjoey’s infrastructure bankers have been talking up the asset’s critical infrastructure credentials and expansion potential, underpinned by a long-term concession with the AA-rated Victorian government.

Non-binding bids are due at the end of May. It comes five months after this column revealed the sell-down.

A teaser, titled Project Shore, is now in front of potential bidders. It says the asset includes a 162-gigalitre desalination plant and infrastructure such as intake tunnels, 84 kilometres of transfer pipeline, and a 220-kilovolt power line (see chart below).

The plant, commissioned by the Victorian government in 2007, uses membrane-based reverse osmosis to turn seawater into fresh water. Bidders have been told to think of coming in on an availability-based public-private partnership structured as a 30-year concession due to expire in 2039.

Barrenjoey’s six-point pitch talked up the Aquasure’s predictable cash flows, thanks to its contract which ensures it prints indexed revenues, even if the government hasn’t placed a water order, as was the case in the 2024 and 2025 financial years amid high rainfall.

The asset has no counterparty risk, thanks to the contracts and Victorian government’s AA/Aa2 (stable) rating. On the cost side, operators Ventia and Suez are contracted on a set-price basis to 2039, cushioning Aquasure’s owners against cost blow-ups. Aquasure itself has an A- rating, with forecast debt service coverage ratio of 1.4-times, according to the flyer.

Read the full story tomorrow and more on the Street Talk page.

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