KKR bid heats up auction for Australia Leighton unit

Citigroup analysts estimate the sale of Leighton's NextGen business could bring in up to A$870 million, while Morgan Stanley expects a sale price between A$625 million and A$750 million. Leighton has $295 million of debt maturing in July 2014, according to Thomson Reuters data.

Private equity interest in NextGen comes at a time when the Leighton unit has been recording strong growth in its core earnings. Its earnings before interest and tax (EBIT) have more than quadrupled since fiscal year 2009, according to Morgan Stanley analysts.

It was not immediately clear who else may be among the short-listed bidders but industry analysts have said Australian telecommunications firm TPG Telecom was a likely contender. Senior TPG officials have not denied their interest in the sale.

"There are strict confidentiality agreements which don't allow us to disclose anything about that, but it will be an interesting process," TPG Chief Financial Officer Stephen Banfield told a shareholders' meeting last week.

Analysts said TPG Telecom was the only domestic telecoms firm that could buy NextGen and gain synergies in its fibre infrastructure network.

Macquarie Group is advising Leighton on the sale.

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