APA (APA) will buy the Queensland Curtis LNG (QCLNG) pipeline from BG Group fthrough the purchase of the shares in QCLNG Pipeline Pty Ltd.

In a deal executed by Macquarie, Morgan Stanley and Deutsche Bank, it is understood APA group will tap the market for a total of $1.8 billion.

Institutional investors will account for around $800 million of that total figure, while retail investors will account for around $1 billion.

The pipeline is a key component of the QCLNG project in Queensland, which links gas fields in the Surat Basin to the project’s LNG plant on Curtis Island.

APA intends to raise $1.839bn through a one-for-three fully underwritten pro-rata accelerated entitlement offer to partly fund the acquisition, with an offer price of $6.60 per new stapled security.

Shares in APA have been placed in a trading halt while the bookbuild is in progress.

The balance is to be funded from a $US4.1bn syndicated bank bridge debt facility.

Th group said it expected to maintain its current credit rating following the acquisition.

APA managing director Mick McCormack said the acquisition enhanced the group’s standing as “Australia’s largest owner of gas transmission pipelines and builds on APA’s strategy of expanding its revenue base and east coast grid”.

Subunderwriting for the retail offer will end on January 20.

It is understood a number of superannuation funds a have already committed to sub underwriting a large proportion of the offer, signalling a keen appetite for infrastructure assets in a low interest rate environment.

The sale is part of UK oil and gas company BG’s plans to sell off non-core assets, and it had previously said it would look to sell the pipeline before year-end.

The company, once a darling of the UK stock market, has struggled in recent times with stagnating production and cost overruns on big projects.

BG said it expected to complete the deal to sell the 543-kilometer pipeline network, which links BG’s gas fields in southern Queensland to export facilities on Curtis Island, in the first half of next year.

“The sale of the QCLNG pipeline is in line with our strategy to focus on BG Group’s core areas of oil and gas exploration and production and liquefied natural gas,” Andrew Gould, BG’s interim executive chairman, said.

With Dow Jones Newswires