Queensland Opens A$7 Billion QR National Stock Sale, Largest After Telstra

Lance Hockridge, chief executive officer of QR National Ltd., speaks during a news conference announcing the company's initial public offering in Brisbane Photographer: Eric Taylor/Bloomberg

Queensland’s government opened the initial share sale of the state’s coal freight network, which may be worth A$7 billion ($6.5 billion) and become Australia’s largest offering since Telstra Corp. in 2006.
“QR National is a growth story - it is Australia’s largest rail freight company and the world’s largest rail transporter of coal from mine to port for export markets,” State Treasurer Andrew Fraser said at a pre-registration meeting for retail investors held in Brisbane today.
Queensland, the third-most-populous Australian state, is selling assets to prop up finances after the recession crimped government revenue. State Premier Anna Bligh said in December she’ll put other assets up for sale in the next two years, including a road network, a coal terminal and a port.
The government formed QR National in July when state-run rail provider QR Ltd., with assets worth A$12 billion, split its passenger train and freight operations. The sale of the non- passenger assets may fetch A$7 billion, Premier Bligh said in June last year. The Australian government sold A$15.5 billion of stock in Telstra, the nation’s largest telephone company.
QR National’s freight network is a “high-quality business” that will meet growing demand for resources in Asia, Fraser said. Public offer documents for the IPO will be available from Oct. 10, he said. QR National will “deliver value for taxpayers,” Fraser said, declining to indicate how much the government was hoping to raise.
Queensland, which is spending A$15 million on the IPO marketing campaign, will initially retain 25 percent to 40 percent of the floated entity, the state government said previously.
State Valuation
If the state keeps 25 percent of QR National and maintains Bligh’s A$7 billion valuation, the sale would be the largest stock offering in Australia since the Telstra sale.
QR National transported more than 198 million metric tons of coal during the 2009-2010 financial year and employs about 9,000 people, with a heavy-haul coal network of more than 2,300 kilometers, according to a presentation on its website.
The government in March appointed Credit Suisse Group AG, Goldman Sachs & Partners Goldman Sachs Australia Pty, Bank of America Corp.’s Merrill Lynch unit, Royal Bank of Scotland Plc and UBS AG to manage the sale.
Commonwealth Bank of Australia Ltd. and Wilson HTM Investment Group were named in July as co-lead managers and Ord Minnett Group Ltd. and Patersons Securities Ltd. were appointed co-managers.
Markets Tumble
Aston Resources Ltd., an Australian coal developer, had to cut the price of its IPO last month as markets tumbled. The reduction in Aston’s offer price follows a 5.9 percent drop this year in Australia’s benchmark S&P/ASX 200 index of stocks. Bilfinger Berger AG, Germany’s second-largest building company, pulled the IPO of Australian unit Valemus Ltd. after investors balked at the price.
Prices for coking coal, a steelmaking raw material, will peak in eight years, after which a market deficit will be plugged, Metal Bulletin Ltd. said in June. China and India, the world’s most populous nations, will account for 70 percent of coking coal demand by 2020, Metal Bulletin said in a report.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net