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Industry Funds May Bid for TDF, Thames Water in European Push

Aug. 7 (Bloomberg) -- Industry Funds Management may bid for TDF SA and Thames Water Plc to beef up the Australian pension fund's portfolio with more European infrastructure companies.

IFM, which has A$10.3 billion ($7.9 billion) under management, would join a group of investors for any offer, said Damian Moloney, general manager of the Melbourne-based fund. The fund is ``thinking about'' Thames Water, Britain's biggest water company, and is ``interested in'' TDF, a French owner of broadcast towers, he said.

Investors are being drawn to utility-related assets for their steady earnings and dividends. Goldman Sachs Group Inc. is raising a $3 billion infrastructure fund, while JPMorgan Chase & Co. and Morgan Stanley are considering similar moves. Australian funds are flocking to Europe amid a dearth of assets at home.

``There is a lot of competitive tension for assets in Australia,'' Moloney said in a telephone interview. Europe is now the ``geographical focus'' of IFM's investment strategy, he added.

IFM plans to spend about $1.1 billion by June 2007 snapping up investments mainly in Western Europe and the U.S., Moloney said.

TDF may be valued at as much as 5 billion euros ($6.4 billion) including debt, a person involved in the deal said last week. The Paris-based company has more than 7,500 towers across Europe and had sales of 954 million euros in 2005, according to its Web site.

RWE AG, Europe's third-largest utility and owner of Thames Water, said on July 6 that it's ``on track'' to sell its $17 billion U.S. and U.K. water units. Thames Water, which serves London and southeastern England, may also be sold in an initial public offering depending on investor demand.

Bidding Partners

Thames Water may also attract bids from Guy Hands's buyout firm Terra Firma Capital Partners Ltd., according to press reports.

IFM has hired Tony Clamp, a former head of project finance at RWE Thames Water, to scour for deals in France, Italy, Germany and the U.K. Clamp joins IFM in September from London-based Infraco Management Services.

The fund also opened an office in London to oversee European investments, which will be run by investment manager Christian Seymour, Moloney said. 3i Group Plc, Europe's largest publicly traded buyout firm, is a ``good partner'' for IFM, Moloney said.

Macquarie Bank Ltd. led a group including IFM that offered 2.59 billion pounds ($4.71 billion) in June to buy Associated British Ports Holdings Plc, Britain's largest port owner. The offer was trumped by a rival bid from Goldman Sachs.

IFM's investments include broadcast towers Arqiva, the Wales and the West Gas Distribution Network and ZEC Lodz, which owns and operates the heating network and cogeneration plants in the city of Lodz, the second largest city in Poland.

The fund also teamed up last month with a group including Macquarie, Australia's largest investment bank, to buy Pittsburgh utility owner Duquesne Light Holdings Inc. for $1.59 billion.