BBI soars after Powerco sale

BABCOCK & Brown Infrastructure Group's (BBI) stapled securities have soared after it said it was selling half of Powerco Ltd's New Zealand business to investment manager Queensland Investment Corporation (QIC).

BABCOCK & Brown Infrastructure Group's (BBI) stapled securities have soared after it said it was selling half of Powerco Ltd's New Zealand business to investment manager Queensland Investment Corporation (QIC).

BBI stapled securities ended up 18.6 per cent, or four cents, to 25.5 cents.

BBI, which bought 100 per cent of Powerco in 2004, said it would raise around $NZ400 million ($349.47 million) from the sale of 50 per cent of Powerco's New Zealand operations to QIC.

The energy and transport fund said it would use the cash to retire debt and fund organic growth opportunities across its international portfolio.

The sale values Powerco's New Zealand business at $NZ2.05 billion and Powerco's total business, which includes its Tasmanian operations, at $NZ2.25 billion.

BBI will retain Powerco's Tasmanian gas distribution business, valued at $NZ200 million.

The move by BBI to offload a slice of Powerco, New Zealand's third biggest energy utility, is part of a restructure announced in May by BBI, which is managed by troubled investment house Babcock & Brown Ltd.

BBI chief executive Jeff Kendrew said the sale demonstrated the underlying value of BBI's portfolio.

"The Powerco New Zealand sale validates our view of the value of the underlying assets in BBI,'' Mr Kendrew said.

QIC's head of global infrastructure, Ross Israel, said Powerco was a  "core regulated utility''.

"As a mature business, we expect it to provide stable long term returns,'' he said.

BBI, which is also undertaking a "co-investment and partnering process'' for WestNet Rail, a Western Australian rail infrastructure operator, and BBI Euroports, said today the process remained underway and that it would provide an update by the end of 2008.

BBI also has interests in gas utility Alinta Ltd, the Dalrymple Bay Coal Terminal in Queensland, a number of ports in Europe and energy cables and pipelines in Australia and the United States.