UPDATED: Infratil, NZ Super Fund nab nearly 40% of Metlifecare
Shares in Metlifecare surged, making it the best performer on the NZX 50 benchmark index today, on optimism new cornerstone shareholders Infratil and the New Zealand Superannuation Fund will add value to the retirement village developer and operator.
Infrastructure investor Infratil and the NZ Super Fund, who previously worked together on Z Energy, both plan to hold a 19.9 percent stake in Metflifecare after agreeing to buy shareholdings from Retirement Villages New Zealand, the companies said in separate announcements today. Shares in Metlifecare jumped 7.9 percent to $4.08.
"There's an expectation that Infratil will be able to bring some strategic support to the company," said Anthony Halls, who helps manage more than $200 million at Mint Asset Management, including shares in Metflifecare and Infratil. "That is what the share price seems to be saying. They think they will be a more supportive shareholder and be able to bring more value than what the previous shareholder did."
Infratil and the NZ Super Fund had a big payday when they each sold a 30 percent stake in Z Energy in an initial public offering in August, having used their financial strength to buy the former Shell assets when markets were still reeling from the global financial crisis.
Retirement Villages New Zealand first sold down some of its Metlifecare holding as part of the retirement operator's merger last year with Vision Senior Living and RVG's Private Life Care business. Vision's private equity shareholders had been Goldman Sachs and Arrow International.
The sale of the stake "is a good thing," said Mint Asset Management's Halls. "It takes away the overhang from RVG. Infratil are fairly proven at adding value to the businesses they invest in so there is probably an implicit expectation in the share price now that Infratil is going to be able to add some value there as well."
Shares in Infratil rose 1 percent to $2.575 today.
Infrastructure investor Infratil and the New Zealand Superannuation Fund have taken cornerstone stakes in retirement village operator and developer Metlifecare [NZX: MET], announcing purchases equivalent to 36.9 percent of the company and taking their joint holdings to 39.8 percent.
Infratil took the larger stake, 19.9 percent, while the Super Fund topped up its existing holding by a further 17 percent to 19.9 percent, meaning the partners who jointly purchased and then partially floated Z Energy hold equal stakes in Metlifecare.
The total value of the latest purchases is $273.9 million,
Infratil's interests include Z Energy, NZ Bus, Wellington International Airport and TrustPower.
Its Metlifecare stake cost it $147.9 million, and the NZ Super Fund bought its latest 17 percent for $126 million, with both purchases were at $3.53 a share.
They bought their shareholdings from Retirement Villages New Zealand, which this week signalled plans to sell its 37.7 percent interest in Metlifecare.
Statements from both parties make no mention of the purchases being coordinated or of any intended joint activity.
"The sector trends are very attractive, and Metlifecare represents a very good entry point for Infratil," chief executive Marko Bogoievski said. "The investment is consistent with many of the demographic and other trends influencing the balance of infrastructure investment activity across our portfolio."
Last week Infratil put off a scheduled share buyback while it looked at some "potential transactions." Infratil's shares were unchanged at $2.55 yesterday.
Bogoievski said Infratil has "extensive property knowledge" and can work with the retirement village operator to develop its brownfield and greenfield sites.
Metlifecare managing director Alan Edwards yesterday told his company's shareholders the retirement village operator is continuing to look for development opportunities in Auckland, Bay of Plenty and Hamilton - an area he described as a "golden triangle."
The deal is expected to settle on Nov. 28, and is conditional on the underwriting agreement between Retirement Villages New Zealand and Goldman Sachs, who is managing the sale of the cornerstone Metlifecare holding, not being terminated.
At the price Infratil and the Super Fund agreed to pay, Retirement Villages New Zealand is set to reap about $280.3 million from the sale of its Metlifecare holding, more than the $270 million value ascribed at the market price when the exit was announced on Monday.
Metlifecare's shares slipped 1.6 percent to $3.78 yesterday, and have climbed 13 percent since Retirement Villages New Zealand said it would sell out.
Retirement Villages New Zealand first sold down part of its holding as part of Metlifecare's merger last year with Vision Senior Living and RVG's Private Life Care business. Vision's private equity shareholders had been Goldman Sachs and Arrow International. Goldman Sachs was joint lead manager of last year's selldown.