South Korean heavyweight JB Asset Management has emerged as a key player alongside private equity firm Newlake Alliance in one of the two bids for the Arrium Australia assets which include the Whyalla steelworks.

BAM is a powerful partner for Newlake. The alternative asset manager is fully owned by Korean giant JB Financial Group, and has some $US4 billion ($5.3 billion) of assets under management.

Street Talk can reveal the Korean consortium is also proposing a 200 megawatt gas-fired power plant be built as part of the proposal which would not only power the steelworks in northern South Australia but also feed extra electricity back into the state's troublesome electricity grid.

The Newlake and JB Asset Management consortium has investment bank Deutsche Bank, law firm Norton Rose and number-cruncher Deloitte in its corner advising South Korean steelmaker Posco, with the consortium intending to use Posco's Finex steelmaking technology for the first time outside of Korea.

Lender sources noted the Korean group's Finex technology is commercially proven, with an initial demonstration plant commissioned in 2003, a second plant in 2007 and a third in 2013.

The investment and total capital spend on the steelworks, if the consortium is successful, is expected to nudge $1 billion.

Importantly, it is understood a binding agreement has been signed by the Newlake and JBAM consortium for the licensing of Posco's Finex technology. 

The entity is proposing a longer ownership stint than the usual five to seven years that private equity holds onto assets, with a decade-long turnaround thought to be part of the plan.

One of the by-products of the Finex process is a large amount of gas, which helps reduce costs of the whole operation by keeping costs of the 200 mega watt-gas fired power plant low in a gas-constrained market. 

That technology - which sources told this column is more environmentally friendly and cheaper to produce than the existing offering - and its investment in Whyalla is a key part of its pitch as the Korean consortium faces off against a rival offer from British bidders Liberty House and its closely-related SIMEC shipping, energy and commodities firm. [The British duo is owned by the Gupta family.]. 

It is understood the two bidders have turned their attention to Canberra after lobbing their binding offers at the end of May. Each bid is said to rely on a material amount of government support to help keep the steelworks operating.

It could take weeks for a final decision to come, sources said, with federal and South Australian governments heavily involved in the negotiations. 

Receiver KordaMentha is overseeing the process on behalf of Arrium's lenders, while Morgan Stanley is running the auction. Arrium went into receivership more than 12-months ago with total debts of $2.8 billion. 

Interestingly, the Liberty House/SIMEC group's bid also contained a proposed "power fix" offering extra power for the state's electricity grid. 

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Major institutional investors are readying themselves to head into due diligence on one of Sydney's best-known landmarks, the Harry Seidler-designed MLC Tower.

When Queensland funds giant QIC put its half stake on the market in March, it excited expectations of $700 million or more

Now the agents appointed to handle the stake, JLL and Savills, have closed off the bidding in order to select a preferred buyer.

Among the logical buyers are global property giant Blackstone, which is selling down its own retail property exposure.

Another prospective candidate is powerful Singaporean fund manager ARA Asset Management, which recently bought 320 Pitt Street in Sydney and has access to an array of funds and mandates flush with Asian institutional capital. [Sources suggested ARA is also in the mix for Mirvac's 477 Collins Street development in Melbourne.] 

Sources also said not to rule out Australia's largest office landlord Dexus, which, under the hand of Darren Steinberg, has been careful not to overbid on opportunities, such as the Brookfield's Wynyard station development.

The MLC Tower, which has a NABERS Energy Rating of five stars, is bound by three key Sydney streets – Martin Place, Castlereagh Street and King Street and offers further development potential on the Castlereagh and King Street sides.

 

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Another day, another potential coal deal involving Glencore. 

This time it is a non-operating stake in the Clermont Thermal Coal Mine in Queensland's Bowen Basin. 

Mitsubishi has investment bank Rothschild in the market drumming up interest in the 31.4 per cent Clermont stake, which the Japanese trading house owns alongside mine operator Glencore, Japan's largest coal power company J-Power and a consortium of Japanese power generators.

In a flyer sent to potential buyers, and obtained by Street Talk, Mitsubishi and Rothschild said Clermont's single pit open cut mine produced 13.1 million tonnes of saleable coal in 2015 and had an 11 year remaining reserve life. 

The mine was pitched as a "first quartile" operation in terms of margin position when compared to global and Australian seaborne coal market players, with a simple design, low strip ratio and minimal required washing. 

The flyer said Clermont produces low ash, low sulphur and high energy thermal coal, which should find itself appealing to Asian buyers. 

Interested parties were told that the mine had a total reserve worth 118 million tonnes and total resource of 141 million tonnes. Production has increased from 3.8 million tonnes when the mine started in 2010 to 13.1 million tonnes in 2015. 

It'll be interesting to see which buyers step up for the auction. 

Up for grabs is a minority stake, with the owners at the behest of 50.1 per cent shareholder and operator Glencore. 

Glencore and Japan's Sumitomo paid just over $US1 billion for a 50.1 per cent stake the mine in 2013, which would imply a $700 million-odd price for Mitsubishi's 34.1 per cent stake. 

Few industry players, however, expect a sale price at that mark. 

It comes at a busy time for coal tyrekickers and bankers, who are running the numbers on a handful of sizeable up-for-sale assets. 

While the biggest is Rio Tinto's Coal & Allied operations in the Hunter Valley which are the subject of a potential bidding war between Glencore and China-backed Yancoal, other assets up for grabs include Glencore's Tahmoor coking coal mine in NSW, Mitsui's 49 per cent stake in Queensland's Dawson coal mine while Exxaro has accelerated plans to sell its 50 per cent stake in the Moranbah South coking coal tenement

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There's movement at the Victorian land titles office. 

Only six weeks after Premier Daniel Andrews put a $2 billion-odd price target on his state's land titles office, Street Talk understands government officials are in the market for scoping study advisers. 

And first up with the pitches are the lawyers. 

Street Talk understands Victoria's Department of Treasury and Finance has written to law firms at the big end of town seeking sale ideas, credentials, experience on similar deals, potential costs and the like. 

All of the big firms are expected to pitch. That means Herbert Smith Freehills will be up against the likes of Allens - which recently advised Hastings Funds Management and First State Super on their acquisition of NSW's land titles registry - Minter Ellison, Baker McKenzie, King & Wood Mallesons, Ashurst and Clayton Utz. 

Victoria is expected to appoint a legal adviser, before turning its attention to investment banks and accounting firms with similar infrastructure deal credentials.

It's likely to need all three for the scoping study and a sale, should the scoping study make findings as expected.

Victoria's move mirrors a similar play in New South Wales, where NSW netted $2.6 billion. That deal took about three years to come together, with a scoping study commissioned before significant separation work prior to the sale.

South Australia is also going down the same path and is seeking bids for its land titles office late next month. 

Victoria's Andrews announced the move when he handed down the annual budget in May. 

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There's nothing the market likes more than a deal involving a company with the word "healthcare" in its name.

So boutique firm Miles Advisory can expect some interest in the auction of Sydney-based Sphere Healthcare, a specialist contract manufacturer that pumps out 650 million soft gel capsules each year along with a range of infant formula, vitamins and other healthcare products. 

As first reported by Street Talk on Tuesday, Miles has been appointed to find a buyer for the business by Sphere's owner, Fulcrum Capital Partners, with a sale process set to get under way in the next four weeks. 

Sphere generates about $40 million in revenue and is one of the country's largest complementary healthcare manufacturers. Its main site is at Moorebank, New South Wales, where it runs a 15,000 square metre facility.

You can bet the pitch will have a Chinese angle. 

The "clean and green" theme is still chugging along nicely for Australian companies selling formula and the like into China, albeit at a slower pace after the daigou "suitcase traders" backed off after some regulatory confusion which has now been cleared up.

Interestingly, Sphere is one of only eight suppliers with China Certification and Accreditation Administration (CNCA) approval for exports into what is the biggest market for infant formula globally. [Another one, owned by Camperdown Powder, was just snapped up by Bellamy's Australia.]

It is understood Sphere's three CNCA "slots" are unencumbered by existing brands which creates an opportunity for other brand owners - such as Bellamy's - to secure access to China.

Sphere Healthcare, run by Paul Riley, is Fulcrum's last remaining investment.

The private equity firm stopped making new investments in 2014 after hedge fund Chenavari Investment Managers and Michael Lukin's ROC Partners invested in Fulcrum - and its only asset Sphere - via warrants and convertible notes. Fulcrum remains in control of the equity. 

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