An Australia-led consortium of investment funds from Canada and the Middle East won the bid for electricity transmission network TransGrid Wednesday, beating a Chinese challenger in a deal worth Aus$10 billion (US$7.3 billion).

China's State Grid was considered a frontrunner but the New South Wales state government said the strongest bid belonged to the locally led NSW Electricity Networks consortium.

"The transaction will deliver gross proceeds of Aus$10.258 billion which will help fund a raft of infrastructure projects across the state," NSW Premier Mike Baird said in a statement.

The winning consortium includes Canadian pension fund Caisse de depot et placement du Quebec (CDPQ), the Abu Dhabi Investment Authority's Tawreed Investments Limited, and a wholly owned subsidiary of the Kuwait Investment Authority, Wren House Infrastructure.

The consortium is led by investment fund Hastings as manager of Utilities Trust of Australia, while locally listed Spark Infrastructure, which owns and manages energy assets, is also part of the group.

The Chinese bid had generated concerns given TransGrid is a critical piece of national infrastructure underpinning the NSW economy and a key part of the country's electricity market.

State Grid's loss comes just days after national Treasurer Scott Morrison blocked the sale of one of the world's largest cattle estates to foreign entities, ruling it was not in the national interest.

Chinese companies Genius Link Group and Shanghai Pengxin had reportedly been in a bidding war to secure the S. Kidman and Co Ltd. pastoral empire for up to Aus$350 million ahead of that ruling.

And last week a decision by the Northern Territory to lease the Port of Darwin to a Chinese firm prompted a review of the rules that allow Australian states to sell strategic assets to foreign firms without federal scrutiny.

Morrison welcomed the awarding of the 99-year lease for TransGrid to the consortium.

"The Foreign Investment Review Board has been in extensive consultation with the NSW government for over 12 months to ensure that national interest considerations are addressed," he said.

"This consultation has also included relevant... agencies that have an interest in the acquisition of critical infrastructure."

Once the transaction is finalised, the state government will retain significant influence over TransGrid, including as regulator.

Morrison said he had asked for further safeguards that were "more stringent than any previous conditions imposed on acquisitions of critical infrastructure".

These include an insistence that foreign consortium members hold no more than a 50 percent share in TransGrid and that 50 percent of TransGrid's boards comprise Australian citizens and residents.

"Australia continues to be open for business and we welcome foreign investment when it is not contrary to the national interest," Morrison said.