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APA takeover poses foreign ownership question

As the CK Consortium seeks an approval from the Foreign Investment Review Board (FIRB) for its $13 billion takeover bid for APA Group, concerns remain regarding the prospect of Chinese-linked ownership of a significant amount of Australia’s gas and electricity assets.

According to The Australian Financial Review, approval from FIRB was always going to be the biggest hurdle for Hong-Kong based consortium’s bid, which this week received the green light from the Australian Competition and Consumer Commission.

The consortium is led by CK Infrastructure, which acquired DUET Group in 2017 and out of that formed the Australian Gas Infrastructure Group, an entity that owns around 23,000 km of natural gas distribution networks, including the Dampier to Bunbury Pipeline.

The publication said government sources had indicated there were concerns about the APA takeover bid, with investment researcher Morningstar saying the proposal was unlikely to succeed.

Matthew Blumberg from Hayberry Global Fund said FIRB approval will “come down to whether FIRB thinks that the assets pose a risk to national security, and where the government draws the line with foreign ownership”.

If the APA acquisition eventuates, a significant proportion of gas transmission assets would be tied to Chinese ownership, with major player Jemena 60 per cent owned by China State Grid.

FIRB has not set a date for its decision, while APA shareholders will vote on the deal in the second half of November.

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