Macquarie Bank part of a consortium to purchase the Wales & the West Gas Distribution Network in the UK for £1.2 billion

31 August 2004

Macquarie Bank today announced it is a member of a successful consortium which has won the right to acquire the Wales & the West Gas Distribution Network (DN) from National Grid Transco plc in the UK for £1.2 billion ($A3.1 billion), a price representing 1.1 times the regulated asset value including actual levels of investment.

The consortium, which is led by the Macquarie European Infrastructure Fund (MEIF), also includes Macquarie Global Infrastructure Fund II (GIFII), Industry Funds Management, AMP Capital Investors on behalf of AMP Life, The Northwestern Mutual Life Insurance Company, Canada Pension Plan Investment Board, and Challenger Financial Services Group, . The sale is expected to be completed in second quarter 2005. Macquarie also acted as adviser, lead underwriter and arranger to the consortium.

Macquarie Bank will contribute £67 million ($A172 million) for a 17 per cent equity stake in DN, out of a total consortium equity commitment of £387 million ($A991 million) (MEIF will acquire a cornerstone investment of 31 per cent and GIFII will acquire a 5 per cent stake). The Bank intends to sell down its position to investors on, or prior, to financial close. The remainder of the acquisition price will be financed by debt provided by Barclays, Dresdner Kleinwort Wasserstein, and Royal Bank of Scotland.

The Wales & the West Distribution Network is a regulated gas distribution business comprising approximately 34,000 km of gas distribution pipelines located in Wales and the South West of England. DN’s catchment area has a population of 7.4 million. The acquisition includes the highly experienced management and staff of DN, with approximately 1,200 full-time staff members and 500 contractors. Distribution mains, service pipelines and associated infrastructure are also included as part of the acquisition.

Chief Financial Officer for Macquarie Bank, Mr Greg Ward, said: “This asset displays similar characteristics to the Bank’s investment in the water utility, South East Water, which has proved very attractive to investors.

“Investors have demonstrated a strong appetite for these types of assets - stable, essential service businesses generating strong and sustainable cash yields and operating in a mature regulatory environment.”

“The Macquarie Group’s ability to advise, arrange and underwrite quality assets such as Wales & the West Distribution Network reflects its position as a global leader in the infrastructure sector, with an unrivalled combination of infrastructure advisory, funding, and funds and asset management capabilities” Mr Ward said.

Mr Ward said there is not expected to be a material impact on Macquarie Bank’s profit as a result of the acquisition and no anticipated Tier 1 capital deduction.

Completion of the sale process requires the consent of the Office of Gas and Electricity Markets (Ofgem), the Health and Safety Executive and the Secretary of State for Trade and Industry.

For further information please contact:

Greg Ward
Chief Financial Officer
Macquarie Bank Limited
Tel: (612) 8232 3543

Erica Sibree
Investor Relations
Macquarie Bank Limited
Tel: (612) 8232 5008
Mobile: (614) 1302 6309

Matthew Russell
Public Relations
Macquarie Bank Limited
Tel: (612) 8232 4102
Mobile: (614) 1069 9532