Alinta break-up given expert's nod

Investment firm Babcock & Brown and its consortium partner Singapore Power International trumped a rival proposal for Alinta by Australia's largest investment bank Macquarie.

Independent expert Grant Samuel and Associates Pty Ltd concluded the Babcock & Brown offer is in the best interests of Alinta shareholders.

The Babcock & Brown offer, which is a mixture of cash and scrip in three of Babcock & Brown's funds, is valued at about $16.31.

Grant Samuel estimated the full underlying value of Alinta shares to be in the range of $13.84 to $16.16 per share.

"This value includes a premium for control and exceeds the price at which Alinta shares would be expected to trade in the absence of the proposal or some similar transaction (and even if some kind of internal structure is implemented)," Grant Samuel said.

"The share scheme therefore provides fair value to Alinta shareholders and is an opportunity for shareholders to crystallise the substantial value uplift that has been created since the company listed seven years ago."

Alinta's portfolio includes electricity and gas distribution networks, power plants, gas pipelines, a wind farm, asset management arm and an interest in an energy retailing unit.

Babcock & Brown and Singapore Power plan to carve up the Alinta portfolio and redistribute the assets within its businesses.

"In summary, Grant Samuel believes that, on balance, Alinta shareholders are likely to be better off if the share scheme is approved than if it is not," Grant Samuel said.

Babcock & Brown's global head of infrastructure Peter Hofbauer said the transaction would position the investment firm and its funds as major infrastructure owners in Australia.

"It positions BnB (Babcock & Brown) and its suite of funds to be an integrated provider of services and infrastructure in gas transmission, power generation, rail infrastructure and ports, especially in the rapidly growing Western Australian market" Mr Hofbauer said.

"At the same time it provides compelling value for Alinta shareholders as endorsed by the Alinta board and the independent expert."

A shareholder meeting to vote on the deal will be held in Perth on August 15.

Alinta shares added three cents to close at $15.18 on Tuesday.