Major Transactions

A transaction is a ‘major transaction’ if it:

• involves the sale, or the granting of exclusive or limited rights for more than five years through a lease or licence, of a physical or financial asset; and
• is expected to result in a payment or benefit to the Government exceeding $20 million (NPV).

This Circular applies to all major transactions apart from those exempted as described below.

Governance Framework

Major transactions are overseen by the Cabinet Standing Committee on Expenditure Review (ERC) on behalf of Cabinet.

An oversight committee is to be established for every major transaction. The oversight committee is responsible for delivering the transaction as well as ensuring that the transaction aligns with the Government's strategic priorities.

The oversight committee is to be chaired by NSW Treasury and is to report to the ERC through the Treasurer and/or the relevant portfolio Minister. The oversight committee is to include appropriately senior representatives (Secretary, Deputy Secretary, Executive Director level, or Director level if approved by the Chair) from DPC and the relevant portfolio agencies. NSW Treasury will provide secretariat functions for the committee, with input from other members as required.

Exceptions

A transaction is not subject to the Governance Framework if it:

• is a real property transaction unless as part of a more complex refinancing (including structured financing of portfolios) or a public-private ownership proposal; or
• results from an unsolicited proposal being progressed in accordance with the Guide for Submission and Assessment of Unsolicited Proposals; or
• only involves government investment in the procurement or purchase of services from third-parties.

Proposals resulting from the Premier’s Innovation Initiative will be assessed according to the Guidelines developed by DPC. Should a major transaction arise for implementation, it will be subject to the Governance Framework unless the Secretary of DPC grants a special exemption.

If an agency is unclear whether its transaction is subject to the Governance Framework, it should seek clarification from NSW Treasury. NSW Treasury can also direct agencies to other relevant information.

Strategic Reviews and Scoping Studies for Major Transactions

Major transactions can be the focus of strategic reviews and scoping studies. A strategic review:

• is a review of possible options for the future management of areas of government activities or assets, where a transaction to divest could be one option. A strategic review precedes the Government decision to sell.

A scoping study:

• follows an in-principle decision to explore divestment options and involves a detailed investigation of the structure and timing of sale ahead of Government endorsement of that structure. A scoping study will typically include a market sounding where an advisor approaches third parties to test their appetite for certain assets or financing structures.

Strategic reviews are not subject to the Governance Framework but scoping studies are subject to the Governance Framework. If an agency undertakes a strategic review that includes consideration of divestments, the agency should consult with Treasury.

Market soundings for a major transaction can only be undertaken as part of a scoping study for the major transaction.