Member log in

Infratil to halve capital spending as Aust options mature

Infratil [NZX: IFT] is expecting to spend between $295 million and $365 million next year on capital projects across its infrastructure portfolio, about half last year’s $613.6 million as Australian wind farm investments by TrustPower are completed.

Chief executive Marko Bogoievski told shareholders at the specialist investment fund’s annual meeting that new focus is now going on social infrastructure opportunities, especially in Australia, where a pipeline of federal and state government public-private partnerships is developing.

The company was projecting it would put between $25 million and $35 million into Australian PPP’s in the 2015 financial year, making it a new sector for investment, and Bogoievski’s presentation says Infratil is making a A$100 million commitment to Australian infrastructure, with the initial $12 million committed in April.

The single largest spending boost will be at Wellington airport, which attracted $20.3 million of capex in the 2014 financial year, but will get a terminal expansion, more shops, and a multi-storey carpark with a projected spend of $65 million to $75 million in the current financial year.

Capex for TrustPower, which was $349.7 million last year, would be $155 million to $175 million.

TrustPower accounted for nearly 40 percent of the $1.97 billion invested by Infratil over the past five years across its whole portfolio, as it built large Australian wind farms and bought a New South Wales wind and hydro generator, Green State Power, in a privatisation sale.

The company expects further opportunities in Australian renewables once the federal government reviews its Renewables Energy Target subsidy scheme to encourage Australia off its heavy dependence on fossil fuels for electricity production.

Its Australian energy retailing operations are under strategic view at present, with the potential to be sold, although Infratil expects to invest between $25 million and $35 million on customer acquisition next year, compared with $22 million this year.

The company continues to see attractive opportunities in the retirement care sector, having spent $147.9 million to buy 19.9 percent of Metlifecare, but nothing is allocated to the sector in the 2015 forecast.

“Allocation of some capital to early stage and higher growth investments will be a driver of future out-performance,” said Bogoievski.

(BusinessDesk)

Comments and questions
1

I am a shareholder who reads all the Infratil material with interest.

I find it hard to see the correlation between $2bn of capex over the last 5 years and value creation.

Having said this...the $200m they spent on Z was brilliant. I understand that part of it - but the other $1.8bn is a less clear!

Is this one of these companies that is a slow burner...these smart investment calls bubble along and then burst into life [5] years down the track? Be interesting to see what the australian energy assets realise.

Trust the track record and wait - albeit that the signs along the way seem vague.