* Qube says China Investment Corp co-investor in Asciano bid
* $6.3 bln bid narrowly higher than rival Brookfield offer
* Regulators to look into CIC involvement amid political
backlash
(Recasts, adds analyst, ACCC comments)
By Byron Kaye
SYDNEY, Jan 28 (Reuters) - Australian port operator Qube
Holdings Ltd QUB.AX said on Thursday a Chinese sovereign
wealth fund was taking part in its A$8.9 billion ($6.3 billion)
bid for rail giant Asciano Ltd AIO.AX , potentially
complicating regulatory approval amid a political backlash
against Chinese investors.
Qube revealed the participation of China Investment Corp
(CIC) CIC.UL as it made the binding cash-and-share offer for
Australia's largest rail freight network, which narrowly bests
an offer from Canadian infrastructure giant Brookfield Asset
Management Inc BAMa.TO .
Qube also set out a plan to split Asciano's business if the
deal is approved: Qube would have most of the ports business
while its offshore co-investors - CIC, the Canada Pension Plan
Investment Board and Global Infrastructure Management - would
own the rail business.
Asciano said in a statement its board was considering the
Qube offer but continues to support the Brookfield offer.
Australia's anti-trust regulator has already raised concerns
about a Brookfield takeover of Asciano, as both firms control
sizeable rail assets across the country.
CIC's involvement in the Qube offer could also run into
difficulties with the Foreign Investment Review Board (FIRB) at
a time when opposition politicians have criticised Prime
Minister Malcolm Turnbull's government over asset sales to
Chinese investors.
Last year, the FIRB blocked the sale of an Australian cattle
ranch to Chinese firms on the grounds of national interest after
politicians raised security concerns about the lease of the
northern Port of Darwin to Chinese-owned firm Landbridge.
A spokesman for Treasurer Scott Morrison declined to comment
on behalf of the FIRB.
Peter Jennings, executive director of think-tank Australian
Strategic Policy Institute and a former defence department
official, said the board would likely base its decision on
whether CIC would have any management or board involvement in
the joint entity.
"Getting regulatory clearance would come down to, not so
much the financial arrangements, but the operational," he added.
Qube managing director Maurice James told reporters he
expected the company's offer would get regulatory clearance
since "the business that's being acquired is an operating
interest (and) CIC has no interest in any activity in this
space".
Australian Competition and Consumer Commission chairman Rod
Sims said the regulator will examine the Chinese government
component of the offer in the context of other Chinese
infrastructure buyouts such as China Merchants Group Ltd's
CNMGP.UL purchase of Port of Newcastle in 2014.
Asciano rose 3 percent to A$8.76 on Thursday in a higher
overall market, below both Brookfield's A$9.10-per-share and
Qube's A$9.17-per-share offer.
($1 = 1.4209 Australian dollars)