With Queensland state debt expected to reach around $80 billion in the next year, investment bankers are clamouring to help the government off-load some of its remaining valuable public assets.
Ex-Treasurer Peter Costello has just handed down his audit report which he was commissioned to oversee to the Queensland government. Included in the audit were recommendations suggesting the privatisation of many assets to help shore up the sunshine state's finances. Major assets that Costello earmarked are reported to include the state's electricity generation, transmission and distribution network and the ports of Townsville and Gladstone. Should these assets come up for a trade sale rather than a float, then there will no doubt be interest from companies including AGL Energy (ASX: AGK) and Asciano (ASX: AIO).
There are also expectations that the Queensland government is gearing up to sell-off a significant portion of its property portfolio. Developers have been sounded out about a sale of public housing, which is believed to include Brisbane riverfront properties, although the Minister in charge has stopped short of a total sell-off stating that "this does not mean we will embark on some sort of wholesale sell-off of the state's public housing stocks." Sunland Group (ASX: SDG) and Devine (ASX: DVN) are two property developers with operations in Queensland that may stand to gain from this.
Previously known as QR National, Aurizon (ASX: AZJ), the rail freight business privatised by the previous Queensland government in 2010, has proved to be a shrewd investment for those that purchased at the initial public offering (IPO). At the time of IPO, the government retained a major stake in Aurizon, however this stake has been progressively sold down and now stands at just 9%.
Foolish takeaway
Public to private assets have a history of being great assets and often very good investments as well. Should any more Queensland assets make their way to a stock exchange listing, investors would be well served by taking a closer look.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
