AustralianSuper’s $NZ5.4bn ($5.1bn) takeover bid for Infratil may trigger a bidding war for one of New Zealand’s most valuable infrastructure funds, say sources.
Infratil has hired Goldman Sachs as its defence adviser after receiving a $NZ7.43-a-share approach, say sources, while AustralianSuper is believed to be working with Morgan Stanley.
The company’s shares last traded at $6.80, with its market value at $4.06bn, making the bid a 28 per cent premium to that price and a 39 per cent premium to its price on December 4.
It is believed that the approach came last week and Infratil’s board had been deliberating behind the scenes.
Market experts say Infratil consists of “a massive portfolio” of assets and there should be other parties eager to take a look.
Another obvious buyer of major infrastructure operations like Infratil is Australian fund IFM Investors.
However, market analysts say that it is unlikely to go up against AustralianSuper, given that the pair have worked together on acquisitions in the past.
A deal with AustralianSuper would probably take a long time to work through, given the complexity of the portfolio.
Buying Infratil also requires a large cheque, which could rule out some parties.
AustralianSuper is the country’s largest superannuation and pension fund with at least $150bn worth of assets under management globally.
Infratil, which is also listed in Australia, is a major investor in Australian infrastructure and owns airports, electricity generators, retailers and telecommunication networks, with operations also in New Zealand and the US.
The company is managed by Morrison & Co.
It owns Vodafone New Zealand and recently acquired an interest in Australian healthcare business Qscan from private equity firm Quadrant in a deal valuing the business at $730m.
Infratil also owns an interest in the Canberra Data Centres business.
Among Infratil’s other assets is a 50.76 per cent stake in New Zealand power company Trustpower, a 60 per cent interest in renewable energy business Tilt Renewables, which is listed in Australia and New Zealand, and renewable energy business Longroad Energy Partners.
Only on Monday, Tilt announced that Infratil had hired Goldman Sachs for a potential sale of its stake after fielding approaches from parties.
Some have suggested that the Infratil bid is fully priced, given that Infratil’s share price has recently rallied at a time when renewable energy, healthcare and data centre assets remain in high demand amid a low interest rate environment.
The deal, should it succeed, would probably result in Infratil cutting ties with its current manager Morrison, which could create cost saving benefits for AustralianSuper.
No doubt one area of focus will be whether the deal gains government support from an Overseas Investment Office perspective, given that Infratil is one of New Zealand’s largest infrastructure owners.
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