Infratil sells Auckland Airport stake, builds warchest

Tuesday 10th November 2009

Infratil Ltd, the investment group in talks to buy Royal Dutch/Shell Group’s New Zealand assets, reaped $87.25 million selling its 3.87% stake in Auckland International Airport, saying it has better uses for the capital.

The Wellington-based investment group sold its 47.4 million airport shares in an institutional placement at $1.84 apiece, a 4.7% discount on yesterday’s closing price. It originally bought the stake in 2007 for $140 million, writing the investment down to $81 million in its accounts in March.

Infratil’s original shareholding cost it $140 million, which was written down to $81 million in its accounts released in March. Shares of Infratil declined 3% to $1.55 on the NZX today and have edged down 4% this year.

The airport is still a good investment, “but for us there are better things that we can do with the money,” Infratil executive team member Tim Brown told BusinessWire.

Infratil, which controls Wellington Airport, teamed up with the New Zealand Superannuation Fund in 2007 to take what was then a strategic 6.2% stake in Auckland Airport, which was considering a takeover offer from Dubai Aerospace. When that proposal faltered, Infratil subsequently supported a partial takeover proposal from the Canadian Pension Plan Investment Board last year. Auckland Airport’s other shareholders include the city’s local authorities, who faced conflicting pressures to monetize their investment or preserve some of the airport in public ownership.

The divestment brings Infratil’s sales of non-core assets to $220 million in the first half, in addition to $98 million of equity raising that leaves it with a considerable war-chest.

“Some of that we’ve used to repay debt, some we’re using for organic internal growth,” said Brown. “There won’t be too many surprises. We’ve had a very active six months and you don’t want that pace all the time.”

The possible purchase of Shell’s New Zealand assets, investment in an Australian power station and potential buying of new buses all figure in Infratil’s future.

“The key is making sure the businesses all continue to perform as well as they can,” he said.

Infratil chief executive Marko Bogoievski will continue to sit on the Auckland International Airport board, as part of the company’s combined New Zealand Super Fund shareholding.

Bogoievski is an alternate for Lloyd Morrison, Infratil’s original founder. Morrison was voted onto the board by outside shareholders and Bogoievski can continue in this role as well. Infratil recently sold its 90% stake in Germany’s Luebeck Airport which it bought in 2005.

Brown said the company has no intention to divest itself of its 100% ownership of U.K’s Kent and Glasgow Airports, and a 66% stake in Wellington Airport.

Businesswire.co.nz

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