Australia Blocks Power Grid Sale To China; Opening Rift Between Countries

Australia's Treasurer Scott Morrison, who must approve major foreign investments, formally blocked the sale of Ausgrid to State Grid Corp of China and Hong Kong's Cheung Kong Infrastructure Holdings earlier in the day.

Last month, Britain said it would review plans to build two nuclear reactors at Hinkley Point with financial backing from China General Nuclear. Prime Minister Theresa May was concerned about the security implications of the proposed Chinese investment, a former colleague and a source said.

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Foreign bidders will likely need to restructure their deals and bring in local partners to succeed in Australia, said Matthew Fitzgerald, an Australian-based corporate partner at law firm Herbert Smith Freehills.

"One example would be that rather than have a majority Chinese consortium buying the asset, you might have three or four different investors, some of whom are Australian, some of whom are Chinese," Fitzgerald said.