Investors underwater as Dalrymple Bay coal float flounders
Retail investors who took a third of the shares on offer in the float of Queensland’s Dalrymple Bay coal terminal were left with big opening day losses on Tuesday.
Retail investors who took a third of the shares on offer in the float of Queensland’s Dalrymple Bay coal terminal were left with big opening day losses on Tuesday when its shares tanked on their first day of trading.
Brookfield Infrastructure Partners sold 51 per cent of its holding in the Queensland export terminal into the float, listing the infrastructure play at $2.57 a share on the back of a promise the company would pay a dividend of 7 per cent next year, with more to come as the metallurgical coal price recovered.
But amid trade tensions with China that have damaged the coal price and broader concerns about investments in coal from institutional investors, big investors stayed away from the float, with smaller investors taking up about a third of the shares on offer.
With the offer price a hefty 16 times multiple of enterprise value to earnings before interest, taxation depreciation and amortisation, the float was seen as pricey by many major investors, although its owners have argued that the terminal’s expansion potential, as well as strong global demand for Bowen Basin coking coal, offer plenty of scope for long-term returns.
But retail punters who bought into the promise were left badly underwater on their initial investment on Tuesday, as Dalrymple shares sank 16 per cent on its first day of trading, closing down 41c at $2.16.
The Queensland state government is also sitting on paper losses of about $20m after spending $128m from its Backing Queensland fund to take a 9.99 per cent stake in the float.
With an annual export capacity of about 85 million tonnes of coal a year, Dalrymple Bay says it handled about 15 per cent of global metallurgical coal exports in 2019, with its tonnages fully contracted under take-or-pay contracts until mid-2028 and a long queue to access its services.
It is also looking to expand its capacity to 97.5 million tonnes.
Ahead of the float Dalrymple Bay said it expected to distribute about $45m to shareholders at the end of the first half of 2021, with promises to grow its annual distributions by 1 to 2 per cent per stapled security.
Brookfield is locked into retaining its 49 per cent stake until Dalrymple Bay releases its first-half financial results next year, when it can sell down a third of its holding.
It can sell down a further third when the company releases its full-year results for 2021.
Separately, Brisbane-headquartered coal hauler Aurizon has finally beaten off attempts by the Australian Competition & Consumer Commission to block the sale of its Acacia Ridge freight hub in Queensland to rival rail major Pacific National for $205m, after the High Court rejected an application by the competition watchdog to appeal a previous Federal Court decision clearing the sale.
The ACCC tried to block the sale of the terminal on the grounds it would lead to higher freight charges through the reduction of competitive tensions between the rival haulers, but lost successive attempts to block the sale in the Federal Court.
Aurizon said it expected the sale to close by June 2021, with only Foreign Investment Review Board and minor regulatory approvals required to close the deal.