Infratil, holding $755M cash following Z sale, sees Pac Hydro sale completed in December

Wednesday 11th November 2015

Infratil, which has built its cash reserves up to $755 million since profiting from the sale of Z Energy, expects the sale of potential acquisition target Pacific Hydro to be completed in December.

The investment company managed by Wellington based investment bank Morrison & Co added to its war-chest with the sale of its remaining 20 percent of Z, booking a profit of $392 million, and is in the process of raising up to $150 million via the sale of eight year infrastructure bonds paying annual interest of 5.25 percent. Australian renewable energy group Pacific Hydro had assets valued at A$1.9 billion as at Dec. 31, 2014.

"One potential investment which has been mentioned in public is Pacific Hydro," said chief executive Marko Bogoievski. "Its breadth of generation assets and development pipeline is diversity of generation assets and jurisdictions makes it well suited to Infratil’s active management capability. A resolution of the process is expected in December."

He said Infratil is yet to make a final decision on a bid and that achieving the best outcome for the company would require patience and a long-term perspective. A capital return to shareholders was also a possibility.

The comments were made as the company announced a 14 percent gain in first-half pretax earnings and affirmed its guidance for full-year growth of as much as 17 percent.

Consolidated earnings before interest, tax, depreciation, amortisation, and fair value movements rose to $271 million in the six months ended Sept. 30, from $242.5 million a year earlier, the Wellington-based company said in a statement. Total income, which includes operating revenue, dividends and earnings from associate companies, increased 7.3 percent to $909.5 million.

The first-half earnings included a $24 million increased contribution from Metlifecare and RetireAustralia in New Zealand and Australia, and an $11 million increased contribution from Trustpower. Infratil confirmed its full-year earnings guidance for the 2016 financial year of $500-$530 million.

First-half net profit rose 5.1 percent to $470.8 million. The company will pay an interim dividend on Dec. 15 of 5.25 cents per share, up from 4.50 cents last year.

Infratil's shares rose 0.5 percent to $3.185, the highest in almost three months, and have gained 13 percent in the past 12 months.

BusinessDesk.co.nz

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